Oil Trading Turbulence Tinged With Growing Hope Of Robust 2024

While crude trading on Thursday maintained its turbulent momentum, traders seemed to maintain  their cautious optimism for the market moving forward as their fears for more bank rate hikes subsided and faith in Saudi Arabia and Russia limiting supplies continued.

Brent was down 23 cents to $87.32 per barrel at 1251 GMT, while West Texas Intermediate was down 37 cents at $84.03, with the dips said to be minimized by the Organization of the Petroleum Exporting Countries (OPEC) stating in its latest monthly report that it expected a healthy oil market for the remainder of 2023 and robust oil demand in 2024.

Further, OPEC forecast that the oil market is on track for a deficit of 2 million barrels per day (bpd) this quarter.

OPEC analysts wrote, "Despite the current elevated level of global refinery runs, gasoline and middle distillate stocks remain well below the latest five-year averages in the U.S. and Europe.

"Looking forward, refinery maintenance and potential production outages during the U.S. hurricane season could potentially tighten the Atlantic Basin market, hence prompting stronger economic incentives for East-to-West product flows."

OPEC saw 2024 global oil demand rising by another 2.2 million bpd compared to 2023, due to economic growth and continued improvements in China.

John Evans, analyst at PVM, said of current oil trading patterns, "Commentators and traders alike are much concentrated on fundamentals rather than what might be ailing the wider macroeconomic suite."

Acknowledging the myopic nature of traders, Evans added, "The poor state of China's manufacturing, its property sector and some stubborn world inflation stand out as issues that the oil fraternity chooses to ignore at present."

Also on Thursday, macro-economic data showed U.S. consumer prices rose 0.2 percent in July, in line with economist expectations, which stoked hope in some quarters that this would prompt the  Federal Reserve to reconsider or minimize further rate hikes.

Keshav Lohiya, founder of Oilytics, remarked, "Hot money continues to flow into the oil complex; the question remains if this is just a beginning of speculative money flowing in, or a bull trap before the majority of market participants return in September."