By Adedapo Adesanya
Oil prices jumped about 2 per cent on Tuesday on a tighter supply outlook and optimism over the resilience of energy demand in major economies by the Organisation of the Petroleum Exporting Countries (OPEC).
Brent futures rose $1.42 or 1.6 per cent to settle at $92.06 a barrel, while the US West Texas Intermediate (WTI) crude increased by $1.55 or 1.8 per cent to trade at $88.84 per barrel. Both benchmarks closed at their highest levels since November 2022.
In its Monthly Oil Market Report (MOMR), OPEC stuck to its forecasts for robust growth in global oil demand in 2023 and 2024, citing signs that major economies are stronger than expected.
Global oil demand for this year was unchanged in its MOMR, at 2.44 million barrels per day, while it forecast world oil demand will rise by 2.25 million barrels per day in 2024.
For August, the group’s production rose modestly, by 113,000 barrels per day, as members not beholden to the cut quotas, such as Iran and Nigeria, lifted production. Meanwhile, Saudi Arabia, Angola, Algeria, and Venezuela were among the countries that saw production declines for August compared to July levels.
Keeping supplies tight, Saudi Arabia and Russia last week extended voluntary supply cuts of a combined 1.3 million barrels per day to year-end.
OPEC member Libya shut four of its eastern oil export terminals due to a deadly storm that has killed more than 5,000 people, while OPEC+ member Kazakhstan reduced daily oil output for maintenance.
These developments further tightened global oil supplies in what analysts say is an already tight market.
The US Energy Information Administration (EIA) projected global oil output would rise from 99.9 million barrels per day in 2022 to 101.2 million barrels per day in 2023 and 102.9 million barrels per day in 2024.
Meanwhile, world demand will rise from 99.2 million barrels per day in 2022 to 101.0 million barrels per day in 2023 and 102.3 million barrels per day in 2024.
EIA also said it expects global oil inventories to decline by almost a half million barrels per day in the second half of 2023, causing oil prices to rise, with Brent averaging $93 per barrel in the fourth quarter.
In the US, EIA projected crude output would rise from 11.9 million barrels per day in 2022 to 12.8 million barrels per day in 2023 and 13.2 million barrels per day in 2024, while liquids consumption would rise from 20.0 million barrels per day in 2022 to 20.1 million barrels per day in 2023 and 20.3 million barrels per day in 2024.
That compares with a record 12.3 million barrels per day of US crude production in 2019 and a record 20.8 million barrels per day of liquids consumption in 2005.
US consumer price index data for August on Wednesday should hint at the outlook for interest rates.
Also, the Federal Reserve is expected to leave rates unchanged at a policy meeting next week, though views are split over whether it will raise rates in November.
The European Central Bank (ECB) will announce its interest rate decision on Thursday.
Looking ahead, oil traders are waiting for supply-demand forecasts from the International Energy Agency (IEA) on Wednesday and U.S. oil inventory data from the EIA on Wednesday.
Modupe Gbadeyanka