Brent gains as OPEC’s latest oil market report eases demand growth concerns

The front-month ICE Brent contract gained $1.09/bbl on the day, to trade at $82.65/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent futures moved higher as demand growth concerns eased in the global oil market following OPEC’s bullish monthly oil market report. The Saudi Arabia-led group expects global oil consumption to increase by 2.3 million b/d in the second half of this year, driven by demand growth in emerging economies like China.

“[Brent] crude oil edged higher as OPEC maintained its forecasts for strengthening demand,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

A fall in US crude stocks also supported Brent futures. Crude oil inventories in the US dropped by 2.43 million bbls in the week that ended 7 June, according to the American Petroleum Institute (API) estimates.

The crude draw was larger than expected, according to market analysts.

“[Brent] Crude oil extended the recent run of gains after the API reported a 2.4 million barrels drop in US crude stocks, and OPEC maintained their positive outlook for 2024 with demand expected to strengthen in the second half of the year,” analysts from Saxo Bank said.  

Downward pressure:

Brent’s price gains were partially capped as oil investors continued to wait for the US Federal Reserve’s (Fed) decision on interest rate cuts in 2024.

The US central bank convened its two-day Federal Open Market Committee (FOMC) meeting yesterday. Oil market analysts expect the US Fed to keep its key interest rates unchanged at 5.25-5.50% due to high inflationary pressures.

The impact of higher interest rates in the US may include a reduction in oil demand, as it elevates the cost of commodities like oil for non-dollar buyers.

By Aparupa Mazumder

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