Still, the price increase was modest, as the American Petroleum Institute estimated a build in oil inventories that analysts did not expect, and as the IEA said it expected lukewarm demand growth this year.
In its January Monthly Oil Market Report, OPEC said on Wednesday it expected demand for oil this year to rise by 2.25 million bpd, slowing down to a still quite healthy 1.8 million bpd in 2025.
Oil demand growth next year will be driven by nearly 1.7 million bpd growth in non-OECD countries, mostly in China, the Middle East, and India, OPEC said.
The latest economic data from China, however, appears to have disappointed oil analysts, despite suggesting pretty solid growth. The Chinese economy expanded by 5.2% in the final quarter of 2023, up from 4.9% in the third quarter. Yet the figure was 0.1% lower than what economists polled by Reuters had expected, hence the disappointment.
The news that oil output in North Dakota had fallen by between 650,000 bpd and 700,000 bpd had a limited positive effect on prices as the outage should only last a few days.
The International Energy Agency, meanwhile said it expected a well-supplied oil market this year, bar any geopolitics-related supply disruptions.
“If we don’t see any major geopolitical surprises, I expect this year a comfortable oil market, a more balanced oil market,” the IEA’s head, Fatih Birol, said in Davos.
Speaking of surprises, the conflict in the Middle East is showing no signs of letting up, with a fresh round of attacks on military targets in Yemen by the U.S. and an exchange of strikes between Iran and Pakistan.
“Brent crude prices remain broadly stuck in a range as they has been over the past two weeks, as market participants struggle to weigh mixed demand-supply dynamics with prevailing geopolitical tensions,” IG market strategist Yeap Jun Rong told Reuters.
ING analysts, on the other hand, pointed to the latest U.S. retail sales data as bearish for oil as it showed stronger-than-expected figures, raising questions about the Fed’s monetary policy this year. The sales data, ING said, largely neutralized Middle Eastern supply concerns.
By Irina Slav for Oilprice.com
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Irina Slav
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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