Brent nears $86 on tight crude supply

Brent nears $86 on tight crude supply

Crude oil market prices continued to rise amid geopolitical tensions, while OPEC+ production scaled back the expansion. The tightening of supply pushed the price of Brent near $86 a barrel, up more than 10% since the beginning of the month, according to the note from commodity strategists ING.

The oil group’s cuts mean the market should tighten further in the third quarter, suggesting there is still room for the market to move higher from current levels.

The price rose despite a weak demand outlook in China and the United States. Industrial production and refining activity in China fell, according to recent data. At the same time, the US had previously reported a surprise rise in crude oil inventories in the latest data from the American Petroleum Institute.

The weak outlook for demand from the world’s largest oil consumer, the US, was reversed by the latest Energy Information Administration -EIA report.

The EIA reported that US commercial crude oil inventories fell by 2.55 million barrels in the past week. The pullback was driven by a surge in exports, which rose 1.23 million barrels per day week-on-week, while imports fell 1.25 million barrels per day weekly.

Refined products also saw inventory declines, with gasoline and distillate stocks falling by 2.28 million barrels and 1.73 million barrels, respectively.

Brent forecast for Q3-2024 remains unchanged at $88 a barrel, ING said, adding that the EIA’s weekly inventory report would have added to positive market sentiment.

Analysts said some of that drawdown may have been due to lower refinery rates, which fell 1.5 percentage points on the week. However, stronger demand also played a key role.

Implied demand for total refined products rose 1.86 MB/d, with increases in demand for gasoline, distillates, jet and fuel oil. Meanwhile, European natural gas prices continue to trade in a relatively volatile manner. Capital raising: Fidelity Bank shares fell by N14.4 billion in market value