By Adedapo Adesanya
Oil prices fell on Thursday as the Organisation of the Petroleum Exporting Countries (OPEC) signalled demand worries, causing Brent crude to drop $1.24 or 1.4 per cent to settle at $86.09 per barrel, as the US West Texas Intermediate (WTI) slipped by $1.10 or 1.3 per cent to $82.16 a barrel.
Both benchmarks had gained 2 per cent on Wednesday to their highest in more than a month, as cooling US inflation spurred hopes that the US Federal Reserve will stop raising interest rates.
However, OPEC flagged downside risks to summer oil demand in a monthly report on Thursday, highlighting rising inventories and challenges to global growth.
OPEC said the usual US seasonal demand uptick could take a hit from any economic weakness due to interest rate hikes, adding that the reopening of China after the scrapping of strict COVID-19 containment measures had yet to stop a decline in global refining intake of crude.
Still, OPEC maintained its forecast that oil demand would rise by 2.32 million barrels per day or 2.3 per cent in 2023 and nudged up its forecast for China. The global figure was unchanged for a second straight month.
OPEC left its 2023 economic growth forecast at 2.6 per cent and cited potential downside risks.
The report also showed OPEC’s oil production fell in March, reflecting the impact of earlier output cuts pledged by OPEC+ to support the market as well as some unplanned outages.
For November last year, with prices weakening, OPEC+ agreed to a 2 million barrels per day reduction in its output target – the largest since the early days of the pandemic in 2020.
Support came from the drop in the US Dollar index as a weaker greenback made oil cheaper for investors holding other currencies, lifting demand.
Signs of a demand recovery in China, the top importer of crude oil and products, provided more support for oil prices.
China’s crude oil imports in March surged 22.5 per cent from a year earlier to the highest since June 2020, data from the country showed on Thursday.
