Meanwhile, China predicts its peak for oil demand: File Image/Pixabay
Although oil prices on Friday declined due to Russia's plan to boost upcoming overseas sales and a rally in the U.S. dollar, two key benchamarks were on track for weekly gains of roughly 2.6 percent thanks to tightening supplies.
Brent fell 77 cents, or 1 percent, to $74.90 per barrel by 1501 GMT, while West Texas Intermediate fell 99 cents, or 1.4 percent, to $71.62 per barrel.
Nishant Bhushan, oil markets analyst at Rystad Energy, said, “The reason oil prices reached such highs in the last few days was clearly supply disruptions and drawdowns in inventories, so now that U.S. oil production is returning, oil as expected trades lower.”
Peter McNally, Third Bridge
We have not hit a ceiling yet
Bhushan was referring to Gulf Coast crude oil exports resuming after hurricane Ida took out 26 million barrels of offshore production; however, about 28 percent of U.S. Gulf of Mexico crude output is still offline.
Peter McNally, global head of industrials, materials and energy at Third Bridge, suggested there is still room for growth: “Fundamentals have gotten better and as long as they continue to improve, oil prices will rise; we have not hit a ceiling yet.”
Indeed, Fatih Birol, executive director of the International Energy Agency, told media on Friday that in terms of gasoline at least, higher prices will continue for "weeks to come" because of impending winter conditions in many parts of the world and riven by "the very strong economic rebound" globally.
But although demand hasn't wavered in the face of the Delta variant or other challenges, the perception persists that it has - and will continue to be threatened.
According to Interfax, Russia will increase its oil exports 3 percent in the fourth quarter, and this prompted Rebecca Babin, senior energy trader at CIBC Private Wealth Management, to remark, “There’s been demand destruction starting with higher prices across energy markets broadly and there’s Russian’s plans to raise its global oil sales.”
Meanwhile, with a view to the longer term, Ma Yongsheng, acting chairman at Sinopec Corp., told a seminar in Beijing that China’s oil consumption is likely to peak around 2026 at 800 million tonnes, or about 16 million barrels per day (bpd).
He added that the country's natural gas consumption is forecast to peak around 2040 when demand is estimated at 620 billion cubic meters.