Oil prices gain on accelerating trade flows
2024-03-28
Summary:
Oil prices rebounded Thursday after two days of decline. Despite Houthi attacks in the Red Sea, trade flows indicate acceleration in early 2024.
Oil prices recovered from two consecutive sessions of decline Thursday. Trade flows have showed signs of accelerating at the start of 2024 despite Houthi attacks in the Red Sea.
Major industrial economies began to regain footing, which should boost demand for transport fuels such as diesel. Most indicators point to manufacturing and freight activity has improved.
Seasonally-adjusted world trade volumes hit a 10-month high in January, according to data compiled by the CPB. Volumes increased compared with the prior year for the first time since Mar 2023.
OPEC+ are unlikely to change oil output policy until a full ministerial gathering in June, three sources told Reuters. The cartel agreed to extend existing output cuts to the end of June this month.
On the other hand, US Crude Oil stocks surprisingly rose by 3.2 million barrels while gasoline stocks rose by 1.3 million barrels in the week ended March 22, according to the EIA. Both crushed analyst estimates.
China’s oil demand has entered a low-growth phase as decarbonisation starts to eat into consumption of fossil fuels though overall demand will remain on an upward trajectory, CNPC said weeks ago.
Brent crude is digesting recent gains at the moment. As we stated earlier, $87 appears to be a strong resistance to cap a sustained rally towards the highs around $90 hit in late October.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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