By Ken Afor
On Tuesday, oil prices rose slightly due to the solid market outlook presented in an OPEC report that noted continued high demand and potential supply disruptions due to the U.S. restricting Russian oil shipments.
Brent crude futures saw an increase of 30 cents, establishing a value of $82.82 per barrel at 0413 GMT, equating to a 0.36% boost.
Simultaneously, the U.S. WTI crude futures surged 28 cents, reaching a value of $78.54 a barrel, which is also a 0.36% growth.
“Following the heavy sell-off in the market over the last three weeks, oil has managed to find some support. While fundamentals may not be as bullish as initially thought, they are still supportive, with the market likely to be in deficit for the remainder of this year,” ING analysts said in a email note.
“The surplus we see early next year could even be erased if the Saudis roll over their additional voluntary supply cuts,” they added.
The Organization of the Petroleum Exporting Countries (OPEC) blamed speculators for the recent decrease in prices in its monthly report. Conversely, they slightly increased its 2023 forecast for global oil demand growth while maintaining its high 2024 outlook.
Oil prices last week plummeted to their lowest point since July, which was attributed to worries that demand could diminish in some of the largest petroleum purchasers, the U.S. and China.
Additionally, Chinese consumer prices in October dropped to the bottom levels observed since the onset of the COVID-19 pandemic, while the country’s exports reported deeper declines than projected.
The U.S. Department of Energy intends to make a purchase of 1.2 million barrels of oil to restore the Strategic Petroleum Reserve after sales from the stockpile hit the highest point in history last year, potentially augmenting demand.
The possible disruption of supply due to a U.S. clampdown on Russian oil exports could lead to an upsurge in prices.
Notices have been sent by the U.S. Treasury Department to companies which manage ships, asking questions about 100 vessels which may have neglected the sanctions imposed by the West on Russian oil. This is the most momentous action taken by Washington since they imposed a limitation on the price of oil in order to restrict income to Russia.
Analysts at ANZ and ING suggested that talks in Iraq to resume an oil pipeline may be a hindrance to the market.
The Oil Minister of Iraq is anticipating an accord with the Kurdish Regional Government as well as foreign oil companies to restart oil production from the Kurdish region’s oilfields and proceed with northern oil exportation through the Iraq-Turkey conduit.
Since March 25, Turkey has stopped approximately 450,000 barrels per day from flowing through the Iraq-Turkey pipeline due to an International Chamber of Commerce arbitration ruling.
Later in the day, the International Energy Agency’s latest monthly oil market report will be a key focus in the market.
On Tuesday, U.S. inflation data will be released and Wednesday will see the publication of the U.S. producer price index data.
Li stated that the possibility of the APEC summit improving Sino-U.S. relations and China reducing interest rates to support the economy as two potential factors that may bolster oil prices.
