OPEC Bullish On Demand Outlook, But Prices Remain Range Bound

Meanwhile, the latest drone strike could influence trading moving forward: File Image/Pixabay

The Organization of the Petroleum Exporting Countries (OPEC) retaining its forecast for solid demand growth for 2024 and 2025 contributed to a modest rise in oil prices on Tuesday, but the commodity remained range bound due to a host of concerns, including ongoing Middle East hostilities.

OPEC said in its latest monthly report that world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025; moreover, the cartel anticipates global economic growth of 2.8 percent this year, driven by continued easing of inflation.

Pundits noted that OPEC's forecast implied an oil market deficit this year; but overall bearish market sentiment was such that Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said, "We anticipate that crude oil prices will continue to be volatile in today's trading session."

Brent rose by 21 cents to $82.42 per barrel by 1550 GMT, while West Texas Intermediate rose 31 cents to $78.24.

Following the head of the U.S. Federal Reserve saying the central bank is waiting for more data to indicate that inflation is moving sustainably at 2 percent before cutting interest rates, the latest reading of the consumer price index showed that inflation increased 0.4 percent in February and 3.2 percent from a year ago.

Still, an optimistic Ole Hansen, a commodity strategist at Saxo Bank, said the higher than expected numbers are not likely to "rock the boat" and "unlikely to impact the thinking."

In other oil news Tuesday that would possibly influence trading before session's end, Russia's Lukoil PJSC halted operations at a refinery in the Nizhny Novgorod region due to a drone strike from Ukraine; media stated that it was the most destructive attack on Russia's downstream sector in more than a month, with the potential to disrupt domestic and overseas flows.

Also, anonymous sources with knowledge of the matter told media that Shell during an update of its energy transition strategy this coming Thursday could announce a slower pace of its emissions reductions, due partly to the post-Covid rebound in oil and gas demand and the Russian invasion of Ukraine.