Oil Ekes Out Gains On EIA Prediction Of Record Consumption In 2024

Analysts forecast robust oil markets moving forward: File Image/Pixabay

Despite a host of bullish signals over the past few weeks failing to sway crude traders' bearish mindset, oil prices on Tuesday rose minimally on the strength of Washington forecasting record global petroleum consumption next year.

Brent settled up 45 cents at $80.10 per barrel and West Texas Intermediate settled up 49 cents at $75.12 per barrel after the U.S. Energy Information Administration said in its Short-Term Energy Outlook that global consumption of liquid fuels will reach 102.2 million barrels per day (bpd) in 2024, driven primarily by growth in countries like India and China.

The Outlook also held that production will reach 12.8 million bpd in 2024, surpassing the current annual high of 12.3 million set in 2019.

Traders were also keen for more detail on the U.S. Federal Reserve's plans to raise interest rates and will be examining CPI data on Thursday for indications on the near-term outlook; this data, said Tamas Varga, analyst at PVM, "could easily clarify the direction of the financial and oil markets for weeks to come."

These considerations eclipsed the biggest news pertaining to oil of the past week, namely the Chinese government relaxing some of its draconian Covid restrictions and allowing its populace more mobility than it has enjoyed in the past three years.

Indeed, Haitong Futures analysts suggested that a revival of Chinese demand may only give oil prices limited support in the face of a slowing global economy, stating that "Considering the recovery of consumption is still at the expected stage, the oil price will most likely remain low and range-bound."

Tuesday's oil gains were somewhat puzzling in light of American Petroleum Institute data showing that crude stocks rose by about 14.9 million barrels in the week ended Jan. 6; they were expected to fall 2.24 million.

However, the analytical community viewed the commodity as generally robust, and mirroring the EIA's 2024 outlook was Deloitte's take on 2023, with Andrew Botterill, national leader of oil and gas for Deloitte Canada, stating  on Tuesday that "We expect things to be relatively robust through 2023, probably on the higher side for the first half of the year.

"I think 2023 is going to look a lot like the end of 2022 within that $80 WTI range."

Deloitte predicted that WTI will decline into the $70 per barrel range through 2030, and Botterill said, "There is a belief that things will soften as we go into the future; these prices [today] will drive investment, and that backwardation is generally an indication of that."