OfBusiness Petroleum Dailies | 7th July 2023

Price

• Oil settled a penny higher after a choppy session in which mixed signals, including a price hike for Saudi crudes and broader risk-off sentiment, pulled traders in opposite directions.
• Brent crude futures were down 2 cents to $76.63 a barrel by 0038 GMT after settling up 0.5% the previous day.
• U.S. West Texas Intermediate crude was at $71.90 a barrel, up 11 cents, or 0.2%, after closing 2.9% higher to catch up with Brent’s gains earlier in the week.

Demand and Supply

• OPEC will likely maintain an upbeat view on oil demand growth for next year when it publishes its first outlook later this month, predicting a slowdown from this year but still an above-average increase, sources close to OPEC said.
• OPEC’s forecast for 2024 will likely be lower than the growth it expects for this year of 2.35 million barrels per day, or 2.4%, an abnormally high rate as the world moves out of the coronavirus pandemic.
• OPEC and the IEA have repeatedly clashed in recent years, with OPEC criticizing the IEA, which advises industrialized countries, for what it sees as irresponsible predictions and subsequent data revisions.
• Oil demand growth is an indication of likely oil market strength and forms part of the backdrop for policy decisions by OPEC and its allies, known as OPEC+. The group in June extended supply curbs into 2024 to support the market as concern over weakening demand pressured prices.
• For 2024, three OPEC sources said that while demand growth was likely to show a slowdown, it would not be as severe as the IEA predicts, and growth will likely be above 1 million bpd and below 2 million bpd. A fourth source close to OPEC said demand will likely rise by at least 1.5 million bpd.

News

• The head of French firm TotalEnergies says national oil giants from the Gulf and other nations must pull their weight against global warming, and the Emirati oil executive chairing the COP28 climate summit is the right man to press them.
• The appointment of Sultan al-Jaber as head of the COP28 talks to be held in Dubai later this year has been controversial because he heads the United Arab Emirates Abu Dhabi National Oil Company.
• The International Energy Agency says no new oil projects can be launched if the world is to reach net zero carbon emissions by mid-century and limit global warming to 1.5 degrees Celsius.
• Pouyanne, however, insisted the world will continue to need fossil fuels to meet growing energy demand from developing nations.
• The bosses of global energy companies this week urged governments to shift the focus to limiting oil demand to reduce emissions, rather than pressuring producers to curb supply, which they say serves only to increase prices.
• Some western governments have announced plans to scale back or halt oil developments and last year, they increased taxes on oil and gas producers after the Ukraine war led to a surge in their profits.

OFB’s Opinion

• It is expected that oil prices will continue to display volatility, but settle slightly higher amidst mixed signals. OPEC foresees a deceleration in oil demand growth for the coming year compared to the current year, yet still above average. However, their forecast for 2024 is anticipated to be lower than the previously expected substantial growth for this year.
• Discrepancies arise between OPEC and the IEA regarding demand predictions, with OPEC criticizing the IEA’s data revisions. Despite the projected slowdown, sources suggest that demand in 2024 will exceed 1 million bpd but fall below 2 million bpd, while another source anticipates a minimum increase of 1.5 million bpd.