Both benchmarks fell Wednesday to their lowest levels since before Russia’s Feb. 24 invasion of Ukraine, which Moscow calls “a special operation.”
The move followed an unexpected rise in US crude inventories last week. Gasoline stocks, the gauge of demand, also showed a surprise rise as demand slowed, the Energy Information Administration said.
The demand outlook remains clouded by growing concerns about an economic downturn in the United States and Europe, debt problems in emerging market economies and a strict zero COVID-19 policy in China, the world’s largest oil importer.
An agreement by OPEC+ on Wednesday to increase its production target by just 100,000 barrels per day (bpd) in September, equivalent to 0.1% of global demand, was seen as bearish for the market.
“Obviously the largely symbolic increase will not provide a significant buffer for any potential supply shock, but the oil balance will not adjust either,” said Tamas Varga of brokerage PVM.
In addition, OPEC heavyweights Saudi Arabia and the United Arab Emirates are poised to offer a “significant increase” in oil production should the world face a severe supply crisis this winter, sources familiar with the matter said. thought of the main exporters of the Persian Gulf.
Still, analysts expect OPEC+’s limited additional capacity, highlighted in a statement on Wednesday, to support prices longer-term.
Oil Forecast
Brent oil prices could rise back above $130 a barrel if the European Union and the United States put a cap on the value of Russian crude that would trigger a supply cut by the Kremlin, BofA analysts said.
In a note published on Thursday, BofA said it expects more upside risks to Brent and US benchmark WTI prices in the second half of this year and 2023.
Source: Ambito
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