Oil Down As Demand Worries Trump Iran Revenge Concerns

But Bloomberg and OPEC project a bullish market ahead: File Image/Pixabay 

As of 16:07 GMT, oil prices on Thursday were down reportedly due to hopes ending for early interest rate cuts and following news of a major U.S. refinery outage.

Brent was down 68 cents, or 0.8 percent, to $89.80 per barrel, and West Texas Intermediate was down 91 cents, or 1.1 percent, to $85.30 per barrel.

The refinery in question was Motiva Enterprise's facility in Port Arthur, Texas, which produces 626,600 barrel per day (bpd) and whose multiple fuel-producing units were halted by a power outage; it was estimated that idling and stabilizing these units would take up to 35 hours.

It was also said that worries over Iran possibly attacking Israel for lethal air strikes in Syria last week took a back seat to lingering concern over the Energy Information Administration disclosing in the previous session that U.S. crude stocks climbed by 5.8 million barrels in the week ended Apr 5, more than double an expected 2.4 million barrel increase.

The EIA also reported a 2.1 million bpd drop in oil product supplied (a proxy for fuel demand), and a 2.7 million bpd drop in crude oil exports.

Further fuelling bearish sentiment was Macquarie Group, which said recent gains were unlikely to be sustained if geopolitical tensions don’t lead to actual supply disruptions, as has been the case so far; it also warned that Brent could enter a bear market in the second half of 2024.

However, Bloomberg maintained that “Many of the world’s top traders and Wall Street banks are shifting toward a bullish sentiment, with some seeing a possible return to $100 for the global benchmark.”

The Organization of the Petroleum Exporting Countries (OPEC) agreed: in its latest monthly report released Thursday, the cartel projected that world oil demand will rise by 2.25 million bpd in 2024 and by 1.85 million bpd in 2025.

OPEC stated, “Despite some downside risks, the continuation of the momentum seen in the beginning of the year could result in further upside potential for global economic growth in 2024.”

However, it warned that “The robust oil demand outlook for the summer months warrants careful market monitoring, amid ongoing uncertainties, to ensure a sound and sustainable market balance.”