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Oil Prices Rise Despite OPEC’s Downgrade of Demand Growth Outlook
Oil Prices Rise Despite OPEC’s Downgrade of Demand Growth Outlook.
Oil Prices Rise Despite OPEC’s Downgrade of Demand Growth Outlook.
– By Adah

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Oil Prices Rise Despite OPEC’s Downgrade of Demand Growth Outlook.

Oil prices gained around 1% on Wednesday, trimming earlier increases after OPEC revised its forecasts for demand growth downward for both 2024 and 2025. This marks the fifth consecutive downgrade in OPEC’s monthly reports.

By 1310 GMT, Brent crude futures had risen 74 cents, or 1.03%, to $72.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed 76 cents, or 1.1%, to $69.35.

“The OPEC Secretariat’s estimates continue to adjust toward consensus, with further downward revisions in demand forecasts for 2024 and 2025,” said Harry Tchilinguirian, head of research at Onyx Capital Group.

Despite the adjustments, UBS analyst Giovanni Staunovo noted that OPEC+—a coalition of OPEC members and allies like Russia—still expects a tightening oil market next year, as demand growth is predicted to outpace non-OPEC+ supply growth.

Earlier in the session, Brent crude rose as much as 1.42% to $73.22, and WTI increased by 1.5% to $69.62. Market optimism was fueled by expectations of higher demand from China, the world’s top oil importer, following its announcement of plans to boost economic growth.

On Monday, Beijing unveiled its intention to adopt an “appropriately loose” monetary policy in 2025, signaling the first easing of its fiscal stance in 14 years. Financial strategist Li Xing Gan commented that while previous measures focused on sectors like electric vehicles and infrastructure, there are now expectations for policies aimed at increasing consumer spending, sparking renewed optimism in oil markets.

Chinese crude imports also showed growth for the first time in seven months, increasing over 14% year-on-year in November.

In geopolitical developments, the Kremlin criticized reports that the U.S. government might impose stricter sanctions on Russian oil, suggesting that the Biden administration aims to leave a challenging legacy for U.S.-Russia relations. Bloomberg News reported that the U.S. is considering harsher measures to constrain Russia’s oil trade, potentially intensifying pressure on the Kremlin.

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Meanwhile, U.S. crude oil and fuel stocks rose last week, according to data from the American Petroleum Institute. Crude inventories increased by 499,000 barrels for the week ending December 6, while gasoline stocks grew by 2.85 million barrels, and distillate stocks by 2.45 million barrels.

Official figures from the U.S. Energy Information Administration (EIA) are expected later on Wednesday. Analysts surveyed by Reuters anticipate a 900,000-barrel drop in crude inventories and a 1.7 million-barrel rise in gasoline stockpiles.

As market participants weigh the impact of OPEC’s demand revisions against signs of recovering demand and evolving geopolitical risks, oil prices remain poised for continued volatility.

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