Expectations of big build in US crude inventories weigh on Brent
Front-month ICE Brent has declined by $1.80/bbl on the day, to $84.30/bbl at 09.00 GMT.
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Upward pressure:
OPEC has raised its demand growth forecast for the year by 100,000 b/d compared to its January forecast. It now expects the global oil demand to increase by 2.3 million b/d this year to 101.9 million b/d. OPEC’s own crude demand is revised upward by 200,000 b/d from its January forecast, to average 29.4 million b/d.
OPEC also forecasts Russian production to decline by 900,000 b/d to average 10.1 million b/d this year. The US Energy Information Administration (EIA) has predicted that Russian oil production will decline by around 10% to average 9.9 million b/d this year.
“A confirmation on tightening market balance should lend support to oil prices,” writes ANZ commodity strategist Daniel Hynes.
Downward pressure:
Going by an American Petroleum Institute (API) estimate, US crude inventories grew by a massive 10.5 million bbls in the week ending 11 January. Official EIA figures are due to come out at 15.30 GMT today.
According to OPEC, US crude exports are expected to decline in the near term due to the cold weather, but it predicts an export rebound after the winter, which will be driven by record US production this year.
"Stronger-than-expected US inflation data" has added downward pressure on Brent, according to Hynes. As reported by the US Bureau of Labor Statistics, rising consumer prices as driven a 0.5% increase in inflation on the month, and a 6.4% increase on the year.
Israel has joined the list of international oil exporters after shipping crude oil from Energean's Karish oil and gas field to Europe. “For the first time in the history of Israeli oil & gas production, hydrocarbon liquids will be exported to global markets,” writes London-based exploration firm Energean. According to Nick Witney, Energean's commercial director, the company will supply light, sweet crude oil to meet global demand.
By Konica Bhatt
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