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Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

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Oil - Investors King

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Rise in Asian Trade as Supply Concerns Heighten Amid Russian Attacks

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Oil

Oil prices surged on Monday during the Asian trading session as concerns over global supply intensified amidst ongoing attacks on Russian energy infrastructure.

Brent crude oil, against which Nigerian oil is priced, climbed by 47 cents to $85.81 a barrel while the U.S. West Texas Intermediate (WTI) crude rose by 49 cents to $81.53 a barrel.

The market’s bullish sentiment was largely influenced by recent attacks on Russian refineries, which added $2-$3 per barrel of risk premium to crude last week.

These attacks persisted over the weekend, further heightening concerns about supply disruptions.

One of the strikes ignited a brief fire at the Slavyansk refinery in Kasnodar on Saturday. This refinery processes approximately 8.5 million metric tons of crude oil annually, equating to 170,000 barrels per day.

Consequently, a Reuters analysis revealed that these attacks have idled around 7% of Russian refining capacity in the first quarter of the year.

The impacted refining complexes play a crucial role in processing and exporting crude varieties to various markets, including China and India.

The escalating tensions in the Middle East also contributed to market unease. Israeli Prime Minister Benjamin Netanyahu confirmed plans to push into Gaza’s Rafah enclave, disregarding pressure from Israel’s allies.

This move raised concerns about regional stability, amplifying geopolitical risks in the oil market.

Investors are closely monitoring the outcome of the U.S. Federal Reserve’s two-day meeting scheduled to conclude on Wednesday.

The Fed’s decision regarding interest rates could provide further clarity on market direction, potentially impacting oil prices in the near term.

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Crude Oil

Oil Prices Surge as IEA Boosts Demand Forecasts and Trims Non-OPEC Supply Projections

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Crude Oil

Oil prices skyrocketed following the International Energy Agency’s (IEA) adjustments to its demand and supply forecasts.

The IEA’s latest report, released Thursday, sent shockwaves through financial markets as it unveiled a robust upward revision in global demand estimates while simultaneously trimming projections for non-OPEC oil supply.

With unparalleled confidence, the IEA bolstered first-quarter global demand growth forecasts, citing improved outlooks in the United States and heightened bunkering demand due to extended voyages circumventing geopolitical hotspots.

This unexpected surge in demand projections has injected a newfound sense of optimism into an industry grappling with uncertainties amid a shifting geopolitical landscape.

Moreover, the IEA’s decision to slash its projections for non-OPEC supply further fueled market exuberance.

Factoring in recent cuts from the OPEC+ coalition and reduced output from non-OPEC nations, the agency’s revised supply forecast sent a clear signal to investors: the tide is turning in favor of tightening supply dynamics.

This monumental shift in market sentiment was reflected in Brent crude futures, which surged by 0.86% to $84.75 a barrel, marking a significant milestone in the oil market’s recovery.

U.S. West Texas Intermediate (WTI) crude followed suit, climbing 1.04% to $80.55 a barrel, as traders reacted swiftly to the IEA’s bullish outlook.

As the energy landscape undergoes a paradigm shift, industry experts anticipate a sustained rally in oil prices, driven by robust demand growth and tightening supply dynamics.

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Brent Crude Oil Hit $82.20 Amidst Strong Global Demand Forecasts

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Brent crude oil - Investors King

Oil prices surged as Brent crude oil rose to $82.20 a barrel, a significant uptick amidst bullish sentiments driven by robust global demand forecasts.

The rally was fueled by expectations of strong consumption, particularly in the United States, the world’s largest oil consumer.

The Organization of the Petroleum Exporting Countries (OPEC) maintained its projection of robust oil demand growth, estimating an increase of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025.

Also, OPEC revised its economic growth forecast upwards for the current year, adding to the positive market sentiment.

Further supporting the rally were reports of declining U.S. crude oil inventories and fuel stocks, indicating healthy demand dynamics in the market.

This news countered concerns raised by the unexpected increase in domestic oil output forecast by the U.S. Energy Information Administration.

Analysts anticipate the Federal Reserve to commence rate cuts despite solid U.S. consumer price increases in February.

Lower rates typically stimulate economic activity and fuel demand for oil, contributing to the buoyant market outlook.

Yeap Jun Rong, a market strategist at IG, highlighted the unwavering optimism in the risk environment, underpinned by the belief that current market expectations for a rate cut in June would suffice to support economic growth.

Despite challenges posed by increased U.S. oil output forecasts, the market remains resilient, bolstered by OPEC’s optimistic demand projections and ongoing geopolitical tensions, including recent drone attacks on Russian infrastructure.

As oil prices continue to climb, stakeholders closely monitor market dynamics and anticipate further developments in global demand and supply trends.

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