Oil prices up for fifth day in a row despite demand concerns

August 13, 2024 (MLN): Global oil prices edged higher on Tuesday for the fifth consecutive session, despite concerns about demand.

Brent crude rose towards $81.45 per barrel after jumping 3.7% last week.

While West Texas Intermediate crude (WTI) was at $79.85 per barrel.

This comes after OPEC's announcement on Monday that it had lowered its forecast for demand growth in 2024 due to weaker expectations in China.

The 2024 demand forecast cut from the Organization of the Petroleum Exporting Countries' (OPEC) highlighted the dilemma faced by the wider OPEC+ group as it aims to raise output from October, as Reuters reported.

"Any reflection of higher economic risks could weigh on oil prices, at a time when OPEC+ has cut their 2024 demand forecast and are set to roll back on their production cuts starting October, which may point to a less tight oil market ahead," said Yeap Jun Rong, market strategist at IG.

But he added investors remained watchful of the latest geopolitical tensions.

The Middle East conflict has escalated, with the U.S. preparing for what could be significant attacks by Iran or its proxies in the region as soon as this week, White House national security spokesperson John Kirby said on Monday.

Any attack could tighten access to global crude supplies and boost prices. An assault could also lead the United States to place embargoes on Iranian crude exports, potentially affecting 1.5 million barrels per day of supply, analysts said.

Marking the group's first reduction to the 2024 forecast since it was made over a year ago.

"If an eventual Iran retaliation falls within the scope of a so-called proportionate response, and the macro disappoints, then Brent holding on to its $80 handle may prove challenging," said Harry Tchilinguirian, head of research at Onyx Capital Group.

Markets are also preparing for Wednesday's U.S. consumer price index report that will give a crucial read on inflation.

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