2023-09-29 03:44:26
Oil prices are expected to gain about 2% weekly after regaining some ground on Friday, as strong holiday demand from China and still-tight U.S. fundamentals outweigh expectations of a possible oil supply increase. ‘Saudi Arabia.
November Brent crude futures, which expire Friday, rose 5 cents to $95.43 a barrel. December Brent futures gained 13 cents to trade at $93.23 a barrel at 0335 GMT.
U.S. West Texas Intermediate (WTI) crude rose 16 cents to $91.87 a barrel.
The market was down about 1% in the previous session as traders took profits after prices hit 10-month highs, and some worried that high interest rates could weigh on demand of oil.
Improving macroeconomic data in China, the world’s largest oil importer, coupled with strong fuel demand in the country which begins its Golden Week holiday on Friday, supported prices.
“Increased international travel during the Golden Week holiday is boosting Chinese oil demand,” ANZ analysts said in a note to clients.
Domestic travel is also expected to boost demand, with data from flight app Umetrip showing the average number of daily flights booked is a fifth higher than for Golden Week in 2019, pre-COVID.
Chinese factory activity likely stabilized in September, a Archyde.com poll showed, adding to a raft of indicators suggesting the world’s second-largest economy has started to stabilize, which could further support demand. Official data is expected on Saturday.
The U.S. economy maintained a fairly solid pace of growth in the second quarter and activity appears to have accelerated this quarter, according to data released Thursday, indicating that strong fuel demand may continue.
Inventories in Cushing, Oklahoma, the delivery point for U.S. crude oil futures, are already at their lowest level since July 2022.
“US oil production is also expected to slow due to falling rig counts. Falling supply and record global demand of 103 mb/d could lead the market to a deficit of more than 2 mb/d in the last quarter.”
Traders are awaiting next week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, to hear whether Saudi Arabia might want to increase supply after a nearly 30% jump in prices this trimester.
“There is likely a reluctance among participants to push too high now with the market clearly in overbought territory,” ING Bank analysts said in a client note.
“It is also possible that OPEC+, and particularly Saudi Arabia, will start reducing supply sooner than expected if prices rise significantly,” they added.
The OPEC+ ministerial panel meeting is scheduled for October 4.
“Next week’s OPEC meeting will be a key update for the market with an increasing likelihood that voluntary supply cuts by Aramco will be scaled back,” National Australia Bank analysts said in a note to customers. (Reporting by Katya Golubkova; Editing by Jamie Freed and Sonali Paul)
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