U.S. crude oil extends gains, trades above $78 as Department of Energy sees supply deficit – NBC Connecticut
The Department of Energy has increased its global oil demand forecast and anticipates a supply deficit for this year. On the other hand, OPEC has maintained strong oil demand and economic growth predictions. However, these projections conflict with the more pessimistic outlook from the International Energy Agency.
U.S. crude oil prices rose over 1% on Wednesday, continuing a rally this week as both OPEC and the Department of Energy project steady demand for the year. The Department of Energy now expects global consumption growth to reach 1.1 million barrels per day, up from the previous estimate of 900,000 bpd. This increase in demand suggests a supply deficit, with world production set to rise by 800,000 bpd in 2024.
According to Martijn Rats, a commodity strategist at Morgan Stanley, the oil market is likely to tighten in the short term. The investment bank predicts a deficit of 1.2 million bpd in the third quarter, potentially driving Brent prices up to $86 per barrel.
Current energy prices include the West Texas Intermediate July contract at $78.86, up 1.23%, and the Brent August contract at $82.80 per barrel, up 1.06%. RBOB Gasoline for July is priced at $2.43 per gallon, up 1.12%, while Natural Gas for July sits at $3.09 per thousand cubic feet, down 1.34%.
OPEC has maintained its demand growth forecast of 2.2 million bpd based on solid global economic growth of 2.8% for the year. This contrasts with the International Energy Agency’s bearish outlook, which predicts weakening demand and increasing supplies.
Analysts at Citi describe recent price movements as rangebound, with volatility at a decade low. They expect a tight third quarter due to summer fuel demand, but foresee a potential “bear market” later in 2024 and into 2025 as planned OPEC+ production increases could lead to Brent prices falling to $60 per barrel.
Traders are closely monitoring U.S. inflation data, the upcoming Federal Reserve meeting, and the latest U.S. inventory report to inform their decisions in the oil market.