Oil prices up; strong demand outweighs surprisingly big Opec+ output hike
Brent crude futures settled up US$1.28, or 1.9 per cent, at US$69.58. US West Texas Intermediate crude settled up 93 cents or 1.4 per cent, at US$67.93. Early in the session, Brent had fallen as low as US$67.22 and WTI's session low was US$65.40.
'The supply picture definitely looks to be elevating, however, the stronger demand is remaining above expectations as well,' said Dennis Kissler, senior vice-president of trading at BOK Financial.
Travel industry statistics released last week showed that a record number of Americans had been set to travel for the Fourth of July holiday by road and air.
On Saturday, the Organization of the Petroleum Exporting Countries and allies in Opec+ agreed to raise production by 548,000 barrels per day in August, exceeding the 411,000-bpd hikes they made for the prior three months.
The Opec+ decision will bring nearly 80 per cent of the 2.2 million-bpd voluntary cuts from eight Opec producers back into the market, RBC Capital analysts, led by Helima Croft, said in a note.
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However, the actual output increase has been smaller than planned so far and most of the supply has been from Saudi Arabia, analysts said.
In a show of confidence about oil demand, Saudi Arabia on Sunday raised the August price for its flagship Arab Light crude to a four-month high for Asia.
Goldman analysts expect Opec+ to announce a final 550,000-bpd increase for September at the next meeting on Aug 3.
Oil had also come under pressure as US officials flagged a delay regarding when tariffs would begin, but failed to provide details on changes to the rates that will be imposed. Investors are worried that higher tariffs could slow economic activity and oil demand.
The US will make several trade announcements in the next 48 hours, Treasury Secretary Scott Bessent said on Monday, adding his inbox was full of last-ditch offers from countries to clinch a tariff deal before a July 9 deadline.
'Although US trade policy is still unfolding, the US is extending deadlines and backing away from punitive tariffs, helping to lift some of the demand gloom in place since April,' said Jeffrey McGee, managing director of advisory firm Makai Marine Advisors.
Meanwhile, Yemen's Iran-aligned Houthis said on Monday a cargo ship they struck with gunfire, rockets and explosive-laden remote-controlled boats had sunk in the Red Sea, after their first known attack on the high seas this year.
Israeli Prime Minister Benjamin Netanyahu was due to meet with Trump at the White House on Monday, while Israeli officials hold indirect talks with Hamas aimed at reaching a US-brokered Gaza ceasefire and hostage-release deal.
Iranian President Masoud Pezeshkian said he believes Iran can resolve its differences with the US through dialogue, but trust would be an issue after US and Israeli attacks on his country, according to an interview released on Monday. REUTERS
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Business Times
3 hours ago
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Opec trims oil demand for next four years
The Organization of the Petroleum Exporting Countries (Opec) cut its global oil demand forecasts for the next four years on Thursday (Jul 10) as Chinese growth slows. This came even as the organisation lifted its longer-term view due to rising oil needs in the developing world; it also said there was no evidence that demand had reached its peak. World demand will average 105 million barrels per day (bpd) this year, Opec said in its 2025 World Oil Outlook published on Thursday. 'Oil underpins the global economy and is central to our daily lives,' said the organisation's secretary-general Haitham Al Ghais in the foreword to the report. 'There is no peak oil demand on the horizon.' Still, Opec's forecasts for demand in 2026 through 2029 are lower than last year. It expects an average demand of 106.3 million bpd in 2026, down from 108 million bpd seen last year. For 2029, the forecast of 111.6 million bpd is down 700,000 bpd from last year's figure. At the same time, Opec expects demand to grow for a longer period than other forecasters, including BP and the International Energy Agency (IEA), which expect oil use to peak this decade. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The Opec+ producer group, comprising Opec countries and allies such as Russia, is pumping more barrels to regain market share after years of cuts to support the market. Lower medium-term demand could make it harder for the group to unwind its other cuts, which remain in place until the end of 2026. Opec said demand had completed its recovery from the Covid-19 pandemic, resulting in a more predictable outlook. It also said that growth is slowing in China, which has driven oil use higher for the last few decades. 'This comes on the back of slower economic growth, the faster penetration of EVs (electric vehicles) and related charging infrastructure and continued oil substitution in several sectors,' it added. Gap with IEA Opec kept its forecast that demand in 2030 will average 113.3 million bpd, unchanged from last year. By contrast, the IEA expects global demand to peak at 105.6 million bpd by 2029, then fall slightly in 2030, the adviser to industrialised countries said last month. For the longer term, Opec expects India, the Middle East and Africa to drive growth. Developments such as the US' exit from the United Nations climate pact and a slower EV penetration rate in Europe will probably have spillover effects into developing countries, which need more energy, Opec said. The organisation expects world oil demand to reach 122.9 million bpd by 2050, up from 120.1 million bpd expected in last year's report. That is far above other 2050 forecasts from the industry such as that of BP. Opec has been calling for more oil industry investment and said the sector needs US$18.2 trillion (S$23.3 trillion) to be spent to 2050, compared with US$17.4 trillion needed as estimated last year. REUTERS
