Oil prices fall 1% to 11-week low on weaker 2024 demand forecast by IEA

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Oil prices fall 1% to 11-week low on weaker 2024 demand forecast by IEA

Crude prices fell about 1% on Wednesday to their lowest level in 11 weeks after data from the International Energy Agency (IEA) showed that oil demand in developed countries was likely to weaken This year.

Brent crude futures fell 62 cents, or 0.8%, to $81.76 a barrel at 10:59 a.m. EDT (2:59 p.m. GMT), while U.S. West Texas Intermediate (WTI) crude fell fell 60 cents, or 0.8%, to $77.42. That pushed both crude benchmarks into technically oversold territory and put them on track to hit their lowest closing levels since Feb. 23.

The IEA reduced its forecast for oil demand growth in 2024 by 140,000 barrels per day (bpd), to 1.1 million bpd, largely citing weak demand in countries of the Organization for Economic Co-operation and Development (OECD). The OECD is a group made up mainly of rich countries.

Oil demand in these countries contracted in the first quarter of this year, the IEA added.

This decline in futures prices came despite a larger-than-expected withdrawal of crude oil from U.S. inventories last week and U.S. inflation data that supported analysts’ expectations for some interest rate cuts from the US Federal Reserve (Fed) later this year. U.S. consumer prices rose less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter, reinforcing financial markets’ expectations that the Fed would cut interest rates. interest in September. Those expectations were bolstered by other U.S. data showing retail sales were surprisingly stable last month as inflation-weary consumers cut back on spending at online retailers and car dealerships. Lower interest rates would reduce borrowing costs for businesses and consumers and could boost economic growth and demand for oil.

Also in the United States, the Energy Information Administration (EIA) said energy companies removed a larger-than-expected 2.5 million barrels of crude from their inventories in the week ended May 10.

That compares with the 0.5 million barrel withdrawal forecast by analysts in a Reuters poll and the 3.1 million barrel drop revealed by data from the American Petroleum Institute (API), an industry group.

Separately, the Organization of the Petroleum Exporting Countries (OPEC) and its allies like Russia, a group known as OPEC+, will likely hold their June 1 oil policy meeting online, four sources said. OPEC+, rather than in Vienna as currently planned. .

“After (the second quarter), we expect oil to turn bearish due to growing non-OPEC supply, decreasing OPEC+ space capacity and weaker than expected demand due to persistent inflation,” said Vikas Dwivedi, global oil and gas strategist at Macquarie. .

FIGHTS IN UKRAINE AND GAZA

In Russia, President Vladimir Putin said Russian forces were improving their positions along the Ukrainian front in all directions every day. Russia has pushed back Ukrainian forces at key points on the front line in recent months, despite hundreds of billions of dollars in aid from the United States and its allies.

The United States is moving ammunition and weapons to the front lines in Ukraine, US Secretary of State Antony Blinken said during a visit to the country.

In Gaza, Israeli troops have battled militants, including in the southern town of Rafah, which served as a refuge for civilians, in a resurgence of a more than seven-month war that has killed tens of thousands of Palestinians.

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