Oil prices hovered near recent highs on Friday following demand predictions from both the OPEC and the International Energy Agency (IEA).
Brent crude oil, against which Nigerian oil is priced, dipped by 12 cents or 0.1% to settle at $86.28 per barrel, while U.S. West Texas Intermediate (WTI) crude shed 7 cents or 0.1% to close at $82.75 a barrel.
The IEA cautioned on Friday that global oil inventories might experience a sharp decline throughout the remainder of 2023, potentially propelling prices even higher. However, the agency anticipates a moderation in demand growth to 1 million barrels per day (bpd) in 2024, down 150,000 bpd from its prior projection.
Similarly, the Organization of Petroleum Exporting Countries (OPEC) released their forecast on Thursday, expecting a 2.25 million bpd increase in global oil demand for 2024, slightly below this year’s growth of 2.44 million bpd. Both estimates remained unchanged from the previous month.
It’s predicted that “solid” economic growth, coupled with ongoing improvements in China will bolster oil consumption in 2024.
Tamas Varga, an oil analyst at PVM, said “The demand outlook is reassuringly positive. These optimistic projections suggest that OPEC holds an optimistic view of global economic prospects.”
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Market sentiment was further uplifted by U.S. consumer price data for July, leading to speculations that the Federal Reserve might be nearing the conclusion of its aggressive rate hike cycle.
On the supply front, prices have received support due to extensions of output cuts by Saudi Arabia and Russia, along with supply concerns stemming from the potential for conflict between Russia and Ukraine to disrupt Russian oil shipments in the Black Sea region.
However, mixed economic data from China weighed on sentiment as customs data indicated a year-on-year increase in crude imports, China’s overall exports saw a significant drop of 14.5%. Monthly crude imports retreated from June’s nearly record-breaking highs to the lowest level since January.
Data from this week also revealed that China’s consumer prices experienced deflation, and factory gate prices extended their decline in July, raising concerns about fuel demand in the world’s second-largest economy.
