Nov 08, 2024 (MarketLine via COMTEX) --
Crude oil prices increased overall during the week due to the announcement from OPEC+ to postpone its oil production hike to January 2025. Prices were also buoyed by improved prospects for economic recovery in the US following the latest cut in the countryaEUR(TM)s benchmark interest rates. However, the the upside to prices was somewhat limited by the re-election of Donald Trump as the next US President who encourages more investments in hydrocarbons to lift the countryaEUR(TM)s oil and gas output. Besides, faltering economic outlook in China also restricted the gains in prices during the week. The country introduced a new fiscal stimulus to improve liquidity, but it was not well received by oil traders and industry watchers, and thus weighed down prices.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices gained on Monday and then rose further on Tuesday after OPEC+ decided to delay its plan to start increasing the collective output for another month. It now expects to raise its output by 180,000 bpd in January 2025 with more increases planned in subsequent months. Prices were also buoyed in anticipation of an announcement on interest rate cuts in the US later this week. The US Federal Reserve is scheduled to review the country’s monetary policy on November 7th, 2024. Besides, a fall in the US dollar against a basket of currencies lent additional support to prices by making crude purchases somewhat cheaper to importers in non-dollar-denominated currencies.
Oil prices dipped on Wednesday, weighed down by prospects of higher oil output from the US following Donald Trump’s historic return to the Presidency. As his policies are viewed to largely favor the petroleum sector, it could bode well for drillers across the country, especially the shale oil patches in the Lower 48 states. Prices also came under pressure from a weekly rise in the US crude and fuel stockpiles. As per the EIA data, while the US crude inventory grew by 2.1 million barrels, the gasoline stocks were up slightly by 400,000 barrels for the week ending November 1, 2024.
Oil prices rose on Thursday, supported by an interest rate cut in the US that could give fillip to business activity in the country, and thus lift energy demand. The US Federal Reserve lowered the benchmark rate by 25 basis points to a range of 4.50%-4.75% during its scheduled fiscal review meet. This was the central bank’s second rate cut of this year following the 50-basis-point reduction in September 2024. Prices also received support from speculation over the next US government’s equation with Iran and its potential impact over stability in the Middle East. Just like in his previous term, there is a belief that President-Elect Trump might impose more stringent sanctions on Iran to curtail its crude oil exports, thereby leading to some tightness in oil supplies globally. It could also lead to a spike in geopolitical tensions in the region.
Oil prices fell on Friday, weighed down by easing worries from a storm-induced disruption to energy assets along the US Gulf Coast. The country’s weather department forecasted that the Hurricane Rafael was likely to fizzle out far away from the coastline, leaving the oil production platforms and processing facilities untouched. Initially this storm was anticipated to disrupt around one-fifth of oil output in the Gulf of Mexico, prompting producers to start evacuating their personnel from certain offshore platforms. Prices were also weighed down by the persistent dip in crude oil imports from China amid subdued economic growth. The country’s crude oil imports fell by nearly 1 million barrels per day (bpd) in October 2024 compared to the previous year. Amid this slowdown, China announced a stimulus package of around $1.4 trillion over five years to address debt issues in regional governments. However, this incentive was unlikely to spur any meaningful growth in the country’s business activity or energy consumption, and hence weighed down prices.
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COMTEX_459800777/2227/2024-11-14T09:37:15
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