BENGALURU: Oil prices rose by more than 1% on Monday after OPEC’s monthly market report eased market concerns about waning demand in the United States and China.
Brent crude futures were up $1.25, or 1.5%, at $82.68 a barrel by 1158 a.m. ET (1658 GMT), while US West Texas Intermediate (WTI) crude futures were up $1.24, or 1.6%, at $78.41.
In a monthly report on Monday, OPEC said that oil market fundamentals remained strong and blamed speculators for a drop in prices. OPEC made a slight increase to its 2023 forecast for global oil demand growth and stuck to its relatively high 2024 prediction.
“The OPEC monthly oil market report appeared to push back against demand concerns, referencing overblown negative sentiment around Chinese demand while raising demand growth forecasts for this year and leaving them unchanged for next,” Craig Erlam, senior market analyst at OANDA, said in a note.
Investors had been worried after the US Energy Information Administration (EIA) said last week that the country’s crude oil production this year will rise by slightly less than previously expected and that demand will fall.
Markets were also wary of potential US monetary policy tightening after Federal Reserve Chair Jerome Powell said last week that the central bank could raise interest rates again if inflation is not curbed.
Weak economic data last week from China, the world’s biggest crude oil importer, also raised fears of faltering demand. Chinese refiners asked for less supply for December from Saudi Arabia, the world’s largest exporter.
Still, oil prices may have found a bottom after they slid about 4% last week and recorded their first three-week declining streak since May, said Fawad Razaqzada, an analyst at City Index.
“Given that oil prices have weakened in the last few weeks, Saudi Arabia and Russia will likely continue with their voluntary supply cuts into next year. This should therefore limit the downside potential,” Razaqzada said. Last week, top oil exporters Saudi Arabia and Russia, part of the group known as OPEC+, confirmed they would continue with additional voluntary oil output cuts until the end of the year as concerns over demand and economic growth continue to drag on crude markets. The next OPEC+ meeting is scheduled for Nov. 26.