4/1/2024

Oil rises on expectations of Chinese growth

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ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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Key points:

  • Oil is rising on expectations of supply cuts from OPEC+ and positive data from the Chinese economy.
  • European oil demand turned out to be more resilient than expected.
  • There is a risk that the forecast for the average Brent price from $83 per barrel will deviate upward.

Oil prices continued their upward trajectory. The growth in quotations is due to the combined influence of two factors: the expected supply reduction from OPEC+ and optimistic data on industrial production in China, signaling a possible increase in oil demand.

The cost of futures contracts for Brent oil rose by 24 cents (0.3%) and reached $87.24 per barrel. Let us recall that last week the growth of this brand of oil was 2.4%. The futures price for WTI crude oil also showed positive dynamics, increasing by 28 cents (0.3%) to $83.45 per barrel. Last week, WTI rose more significantly at 3.2%.

Oil demand in Europe turned out to be better than expected

Oil trading volumes are expected to be limited this Monday due to the Easter holidays celebrated in several countries.

It is worth noting that both benchmark indices – Brent and WTI – ended March with growth for the third month in a row. Since mid-March, the Brent price has not fallen below $85 per barrel. This is due to OPEC+’s decision to extend oil production cuts until the end of June, which could lead to a supply shortage on the market during the summer months in the Northern Hemisphere.

Analysts at Goldman Sachs note that oil demand in Europe turned out to be more stable than predicted. It rose by 100,000 bpd in February, while it was previously expected to decline by 200,000 bpd in 2024.

Thus, robust demand in Europe, limited supply growth in the US and a possible extension of OPEC+ cuts until the end of 2024 offset the risks associated with a potential decline in demand due to slowing economic growth in China.

Hopes for the Chinese economy

Crude oil production in the US, the leader in this indicator, fell 6% in January 2024 compared to the December record high. According to Energy Information Administration data released on Friday, the drop in production was due to freezing weather.

Analysts note that there is a risk that the forecast for the average Brent price in the fourth quarter of 2024 will deviate upward from $83 per barrel.

Oil prices were also supported by the recovery in manufacturing activity in China. It rose for the first time in six months in March, according to an official business survey released on Sunday, signaling continued demand for oil from the world’s largest importer.

At the same time, investors are closely monitoring US economic indicators, assessing the likelihood of the Federal Reserve cutting interest rates this year. This measure could stimulate the global economy and, as a result, the demand for oil.

ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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