Oil Prices on Track for Weekly Gain Heading into Summer
2024-06-14
Summary:
Oil prices fell Friday but aimed for their first weekly gain in four weeks, balancing high US interest rates against strong demand outlooks.
Oil prices fell on Friday but were on track for their first weekly gain in four weeks as markets assessed the impact of higher-for-longer US interest rates versus solid outlooks for crude and fuel demand this year.
The OPEC stuck to a forecast for relatively strong growth in global oil demand for 2024 after the cartel and its allies agreed to start unwinding their output cuts after September.
Oil prices are poised to surge this summer due to increased demand for transportation and cooling, despite production phaseouts expected to temper the rise. According to analysts at Goldman Sachs, Brent crude is forecasted to climb to $86.
Wall Street widely predicts slowing demand amid greater supply will send prices lower next year, with JPMorgan analysts predicting Brent to average $75 in 2025, sharply down from $83 in 2024.
Crude inventories rose by 3.7 million barrels in the week ended June 7, the EIA said, compared with analysts' expectations for a 1 million-barrel draw. The rise was driven largely by a jump in imports.
Oil refining in China is expected to be flat or fall for the first time in data that extends back to 2004 — excluding a Covid-hit 2022 — in a blow to global demand, according to a survey by Bloomberg.
Brent crude has failed to break out of the range between $83 and $81 during the busy week. China PPI contraction eased in May, so the risky looks slightly more skewed towards the upside.
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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