Oil inches higher amid concerns about both supply and demand
Traders are awaiting comments from Jerome Powell for clues on rate cuts, which will be seen as positive for the economy and demand
06 March 2024 - 12:11
by Paul Carsten
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
London — Oil prices rebounded slightly on Wednesday after four days of declines as signs of supply tightness amid output cuts by major producers overrode demand concerns in China and the US, the world’s two biggest crude consumers.
Brent crude futures were up 53c, or 0.65%, to $82.57 a barrel at 9.22am GMT, while US West Texas Intermediate (WTI) crude futures rose 64c, or 0.82%, to $78.79 a barrel, after declining the past two days.
China’s 2024 economic growth target of around 5% set on Tuesday lacked big-ticket stimulus plans to bolster its struggling economy, raising concerns of sluggish oil demand growth.
The market “specifically was hoping to see further fiscal expansion to help meet the growth target”, said Tony Sycamore, an analyst at IG in Sydney.
Eyes are now on US Federal Reserve chair Jerome Powell’s semi-annual monetary policy testimony to Congress on Wednesday and Thursday and Friday’s US employment data, Sycamore said.
Friday’s US nonfarm payrolls data is expected to show an increase of 200,000 jobs in February after surging 353,000 in January, according to a Reuters survey of economists.
Powell’s comments and the jobs data could provide clearer direction on US interest rates, and signs of a Fed cut would be seen as positive for the economy and oil demand.
Oil prices were lifted by the announcement on Sunday that oil cartel Opec and its allies (Opec+) extended output cuts of 2.2-million barrels a day until the end of the second quarter.
The extension has created some supply tightness, particularly in Asian markets, along with the disruption in oil tanker movements as a result of the Red Sea attacks by the Houthi militia in Yemen that is tying up barrels in transit.
That physical tightness was apparent as Saudi Arabia, the world’s biggest oil exporter, announced on Wednesday slightly higher prices for April crude sales to Asia, its biggest market.
The first of this week’s two US inventory reports, from the American Petroleum Institute industry group, showed US crude stocks rose by 423,00 barrels in the week ended March 1, market sources said, much smaller than the increase of 2.1-million barrels, expected by analysts in a Reuters poll.
Official data from the US Energy Information Administration is due on Wednesday at 3.30pm GMT.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil inches higher amid concerns about both supply and demand
Traders are awaiting comments from Jerome Powell for clues on rate cuts, which will be seen as positive for the economy and demand
London — Oil prices rebounded slightly on Wednesday after four days of declines as signs of supply tightness amid output cuts by major producers overrode demand concerns in China and the US, the world’s two biggest crude consumers.
Brent crude futures were up 53c, or 0.65%, to $82.57 a barrel at 9.22am GMT, while US West Texas Intermediate (WTI) crude futures rose 64c, or 0.82%, to $78.79 a barrel, after declining the past two days.
China’s 2024 economic growth target of around 5% set on Tuesday lacked big-ticket stimulus plans to bolster its struggling economy, raising concerns of sluggish oil demand growth.
The market “specifically was hoping to see further fiscal expansion to help meet the growth target”, said Tony Sycamore, an analyst at IG in Sydney.
Eyes are now on US Federal Reserve chair Jerome Powell’s semi-annual monetary policy testimony to Congress on Wednesday and Thursday and Friday’s US employment data, Sycamore said.
Friday’s US nonfarm payrolls data is expected to show an increase of 200,000 jobs in February after surging 353,000 in January, according to a Reuters survey of economists.
Powell’s comments and the jobs data could provide clearer direction on US interest rates, and signs of a Fed cut would be seen as positive for the economy and oil demand.
Oil prices were lifted by the announcement on Sunday that oil cartel Opec and its allies (Opec+) extended output cuts of 2.2-million barrels a day until the end of the second quarter.
The extension has created some supply tightness, particularly in Asian markets, along with the disruption in oil tanker movements as a result of the Red Sea attacks by the Houthi militia in Yemen that is tying up barrels in transit.
That physical tightness was apparent as Saudi Arabia, the world’s biggest oil exporter, announced on Wednesday slightly higher prices for April crude sales to Asia, its biggest market.
The first of this week’s two US inventory reports, from the American Petroleum Institute industry group, showed US crude stocks rose by 423,00 barrels in the week ended March 1, market sources said, much smaller than the increase of 2.1-million barrels, expected by analysts in a Reuters poll.
Official data from the US Energy Information Administration is due on Wednesday at 3.30pm GMT.
Reuters
Asian shares take lead from weaker Chinese market
Gold stays above $2,100
Oil recovers slightly from extended losses
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
JSE lifts and world markets vary before Jerome Powell’s testimony
MARKET WRAP: Rand firms below R19 after economy inches up
WATCH: Market Report
WATCH: Market Report
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.