December 13, 2023 (MLN): Global oil prices fell on Wednesday, extending losses from the previous session after U.S. economic data showed an unexpected rise in consumer prices coupled with concerns about oversupply.
Brent crude is currently trading at $73.13 per barrel, down by 0.47% on the day.
While West Texas Intermediate crude (WTI) is trading at $68.58 per barrel, down by 0.48% on the day.
It is crucial to mention that both benchmarks fell to their lowest level in six months after witnessing a drop of around 3.5% in the previous session.
The U.S. consumer price index (CPI) for the month of November 2023 rose by 3.1% YoY, slightly hotter than what analysts expected.
Meanwhile, on a sequential basis, US CPI rose by 0.1% MoM as compared to 0% MoM in the previous month.
Higher rates for longer could slow economic growth and speak to a softening oil demand picture, said John Kilduff, partner with Again Capital LLC, as Reuters reported.
Global oil demand growth is expected to slow in 2024 with OPEC and the International Energy Agency split on the extent. OPEC and the IEA both update their forecasts this week.
"Negative sentiment towards the oil complex is still overpowering at the moment," Kpler analyst Matt Smith said.
Weak demand and concerns that the OPEC+ deal to curb supplies will not do enough to balance the market weighed on prices, he added. OPEC+ agreed to limit supplies by 2.2 million barrels per day in the first quarter.
Investors are now awaiting the outcome of Wednesday's Federal Reserve meeting. The central bank is widely expected to keep rates on hold.
The U.S. Energy Information Administration (EIA) lowered its 2024 price forecast for Brent crude by $10 a barrel. Brent would average $83 per barrel, the administration forecast in a monthly report, versus an estimate published last month of $93 per barrel.
Still, the administration expected supply cuts from the OPEC+ deal would help lift Brent prices in the first half of 2024.
U.S. crude oil production is expected to rise by 1.02m bpd to 12.93 million bpd in 2023 and by 180,000 bpd to 13.11m bpd in 2024, the EIA said. U.S. crude output hit a current all-time high of 12.31m bpd in 2019.
U.S. crude stocks fell by 2.3m barrels in the week ended December 8, according to market sources citing American Petroleum Institute figures on Tuesday.
U.S. government data on stockpiles due on Wednesday is expected to show a 1.5 million-barrel drop in crude stocks.
In the Middle East, Yemen's Houthis said they attacked a Norwegian commercial tanker in their latest protest against Israel's bombardment of Gaza, escalating the risk of supply disruptions in the region.
At the COP28 climate summit, negotiators are awaiting a new draft deal after many countries criticized a previous version as too weak because it did not include an agreement to phase-out fossil fuels.
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Posted on: 2023-12-13T11:21:37+05:00
