Business a.m
Oil prices settled at a stable level on Thursday, as traders attempted to balance concerns about the global economic outlook with positive impulses from disrupted U.S. oil production and geopolitical risks in the Middle East.
U.S. West Texas Intermediate (WTI) crude futures for February delivery gained 0.1 per cent to settle at $72.56 a barrel, while the international benchmark Brent crude futures for February delivery slipped 0.2 per cent to close at $77.76 a barrel.
On Wednesday, crude prices fell sharply after China’s fourth-quarter GDP growth data disappointed expectations. The country’s economy grew by 3% year-on-year in the fourth quarter, missing the consensus forecast of 3.2% and down from 3.9% in the third quarter. The poor economic data raised concerns about oil demand in China, the world’s largest oil importer, driving down crude prices. It also signaled that China’s growth will remain sluggish, potentially reducing global oil demand and weighing on prices in the coming months.
On the same day, data from the American Petroleum Institute (API) showed that U.S. crude inventories increased by 1.1 million barrels in the week to January 12, defying analysts’ expectations of a 500,000-barrel drawdown. The increase in crude inventories added to the bearish sentiment in the oil market, while increases in gasoline and distillate inventories reflected weaker demand in the U.S., raising further concerns about the outlook for oil consumption.
The economic slowdown in Europe also weighed on oil prices,with data showing that Germany, the eurozone’s largest economy, barely avoided a recession in the fourth quarter of 2022. Additionally, the strength of the U.S. dollar put downward pressure on crude prices, as a stronger dollar makes oil more expensive for buyers in other currencies.
However, on Thursday oil prices stabilised after the International Energy Agency (IEA) increased its forecast for oil demand growth in 2024. In its latest report, the IEA said that demand is expected to grow by 1.24 million barrels per day in 2024, up 180,000 bpd from its previous forecast.
OPEC’s report on Wednesday further supported the stabilisation of oil prices. In its report, the oil cartel maintained its forecast for demand growth of 2.25 million barrels per day in 2024, which was more optimistic than the IEA’s revised forecast.
