Oil rose as the International Energy Agency said it expects global demand to increase in 2024 albeit at a “comfortable” pace. Traders are also awaiting a market outlook from OPEC as the cartel presses on with supply curbs to support prices.
Brent traded near $83 a barrel, gaining ground for the sixth time in seven sessions, while West Texas Intermediate was above $77. The International Energy Agency estimates that global consumption will increase by 1.2 million to 1.3 million barrels a day in 2024, which will be easily matched by the swelling production from the Americas.
Meanwhile, a chunk of the vast fleet of tankers that Russia uses to deliver its crude is grinding to a halt under the weight of US sanctions, according to ship-by-ship tracking. That’s another sign that tougher measures by Western regulators might be starting to have tangible effects on Moscow amid the war in Ukraine.
While oil has advanced this year, it’s yet to break decisively higher. The impact of OPEC cuts, as well as nervousness over conflict in the Middle East including attacks on shipping in the Red Sea, have largely been offset by ample output from outside the group as well as an uncertain demand outlook.
The monthly report from the Organization of the Petroleum Exporting Countries will shed light on expected global balances over the quarters to come. Morgan Stanley recently raised its oil price targets, citing factors including OPEC’s better-than-expected compliance with cuts.
The broader OPEC+ alliance plans to decide early next month whether to extend their cuts into the second quarter. Ahead of that, Iraq has said its supply is now in line with the group’s earlier accord, while the UAE said it’s committed to working with the alliance to ensure market stability.
What’s of interest to the market is “what OPEC+ decide to do with their voluntary supply cuts, which expire at the end of March,” said Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. “Our balance sheet suggests that the market will be in surplus in the second quarter of 2024 if the group fails to roll over part of these cuts.”
After OPEC’s outlook, the IEA will release its corresponding view on Thursday. Trading volumes in Asia will also likely be thin on Tuesday with many markets off for the Lunar New Year holidays.
