Crude Oil Prices Edge Up Amid OPEC Demand Cuts and U.S. Inventory Build

Key Takeaways:

• Brent and WTI futures saw minor gains despite OPEC and EIA revising down global demand forecasts for 2024 and 2025.
• OPEC adjusted its 2024 growth projection to 1.8 million barrels per day and 1.5 million barrels per day for 2025, citing weaker-than-expected demand from China and the shift to renewable energy.
• U.S. inventories rose above expectations, indicating slower demand, with increased stockpiles at Cushing and gasoline levels also rising.

Petroleum Price Updates and Futures Trends

• January Brent oil futures were at $72.04, up by 0.21 percent, and December crude oil futures on WTI (West Texas Intermediate) were at $68.25, up by 0.19 percent.
• November crude oil futures were trading at ₹5,763 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday, compared to the previous close of ₹5,776, down by 0.23 percent. December futures were trading at ₹5,771, down by 0.21 percent from the previous close of ₹5,783.

OPEC and EIA’s Revised Demand Forecasts

• The monthly oil market report by OPEC (Organization of the Petroleum Exporting Countries) forecasted a decline in global oil demand in the coming months. The revised growth forecast for 2024 has been adjusted down slightly by 107,000 barrels per day from the previous assessment, to 1.8 million barrels per day year-on-year. This revision is primarily due to updated data for the first, second, and third quarters of 2024.
• For 2025, global oil demand growth has also been revised down by 103,000 barrels per day, to 1.5 million barrels per day year-on-year. Demand for oil is being impacted by various factors, including uncertainties surrounding China’s economic recovery and the global transition to cleaner energy sources. U.S. crude inventories rose by 2.149 million barrels for the week ending November 1, surpassing expectations. Increased stockpiles at the Cushing, Oklahoma hub and gasoline inventories reflect slower demand in the market.
• The U.S. Energy Information Administration (EIA) has also lowered its forecast, projecting global oil demand to rise by 1.2 million barrels per day in 2025, reaching 104.3 million barrels per day. This is 300,000 barrels per day lower than previous projections. U.S. oil demand is expected to reach 20.5 million barrels per day in 2025, slightly below prior estimates, while production is projected to grow more modestly to 13.54 million barrels per day, down from earlier forecasts.

Global Economic Factors Impacting Oil Demand

• Crude oil prices rose by 0.24 percent to ₹5,776, supported by low-level buying despite downward pressure from OPEC’s revised global demand forecasts. In its latest report, OPEC cut its global oil demand growth forecast for 2024 to 1.82 million barrels per day, down from last month’s estimate of 1.93 million barrels per day, marking the fourth consecutive downward revision.
• The outlook for 2025 is also weaker, with growth now estimated at 1.54 million barrels per day, down from the prior forecast of 1.64 million barrels per day. This revision is driven by factors such as uncertainties in China’s demand and the global energy transition. Adding to the sentiment, the U.S. Energy Information Administration (EIA) adjusted its projections in its Short-Term Energy Outlook.
• Market reports also indicate that U.S. President-elect Donald Trump’s likely pick for Secretary of State, Marco Rubio, may take a hardline stance on China, which could potentially weaken demand for crude oil. Additionally, weak economic growth in China has already impacted the global demand for oil, contributing to downward pressure on prices.

Expert Opinion on Current Price Levels and Support Zones

It is anticipated that the market is undergoing short covering, with open interest decreasing by 4.69 percent to 12,811 contracts as prices rose by 14 rupees. Crude oil finds support at 5,721, with further support at 5,667, while resistance is set at 5,834. A break above this resistance could see prices testing the 5,893 level, suggesting potential for upward momentum in the near term. The expected trading range for today is between $66.70 support and $69.70 resistance. The overall trend is expected to be bearish.