Global demand concerns push Brent lower

The front-month ICE Brent contract has moved $1.71/bbl lower on the day, to trade at $77.14/bbl at 09.00 GMT.

PHOTO: Oil pump jack against the US Dollar and Chinese Yuan. Getty Images

Upward pressure:

Brent futures gained some upward momentum this week after leading oil producers Saudi Arabia and Russia announced additional voluntary oil output and export cuts for 2024.

The two oil exporting nations are the leading oil producers in the OPEC+ group. With their commitment to continue oil supply cuts, analysts expect Brent’s price to go up in the first quarter of 2024.

Saudi Arabia pledged to cut an additional 1 million b/d of oil supply starting 1 January until the end of March 2024, while Russia said it will reduce oil and oil products exports by an additional 500,000 b/d during January-March 2024.

“The group [OPEC+] and in particular Saudi Arabia have demonstrated their desire to support prices this year and we do not expect this to change through 2024,” said two analysts from ING Bank.

Downward pressure:

Brent futures lost the previous day’s gains after the American Petroleum Institute (API) reported a 594,000-bbls-increase in US commercial crude inventories in the week ended 1 December. The latest API data has raised concerns about a slowdown in oil demand growth in the US.

The broadly followed US government data on crude oil stockpiles from the US Energy Information Administration (EIA) is due later today.

Brent’s price faced more downward pressure after rating agency Moody’s downgraded the outlook on China from stable to negative. Moreover, China’s state-owned refineries Sinopec and PetroChina reduced their crude runs in November after demand grew weaker due to fewer public holidays and declining temperatures.

By Aparupa Mazumder

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