VINACHEM

The Organization of the Petroleum Exporting Countries (OPEC) left its growth forecast for global oil demand almost unchanged on Tuesday while warning the economy faces rising uncertainty and slower growth in the second half of the year.

It said in its monthly report that world oil demand this year will rise by 2.35 million barrels per day (bpd), or 2.4%, which is not so dissimilar to its 2.33 million bpd forecast last month.

"There are rising uncertainties regarding economic growth in the second half of 2023 amid ongoing high inflation, already elevated key interest rates and tight labour markets," OPEC said.

"Moreover, it is still unclear as to how and when the geopolitical conflict in Eastern Europe might be resolved," it also noted, referring to the war in Ukraine.
Its latest update comes after OPEC+, which includes OPEC members as well as Russia and other allies, has been taking steps to boost oil prices amid recent market declines.

At the beginning of this month it announced plans to extend crude production cuts into 2024 and said in a statement that it was acting “to achieve and sustain a stable oil market”, while Saudi Arabia opted to voluntarily cut crude output by 1 million bpd from July.

Goldman Sachs said after the developments that the cuts could add some $6 (£4.76) per barrel to the price of the commodity, depending on how long the cut is kept in place.

Today, oil prices edged higher after ending the previous session lower as traders also continued to worry about demand in China – and also considered the potential impact of interest rate decisions this week from the US Federal Reserve and the European Central Bank (EBC).

US crude oil, or West Texas Intermediate (CL=F), gained 0.58% to trade at $67.51 (£53.71) a barrel, while Brent crude (BZ=F) rose 0.86% to $72.46 a barrel.

The mixed oil prices over the last couple of days come as traders expect the Federal Reserve to pause its 15-month rate hiking campaign, and to potentially raise rates next month, in a bid to tame inflation.

Higher interest rates have caused oil prices to fall in the past as it translates to less demand for oil as activity declines with higher costs, slowing the economy. On 3 May, for example, oil prices fell 4% after the US Federal Reserve raised interest rates as investors fretted about the economy. 

– Yahoo News –