Oil prices flat amid demand concerns, OPEC’s revised forecasts

WEB DESK: Global oil prices remained steady on Thursday as investors closely monitor developments in the Middle East and await more information on China’s economic stimulus plans. They are also preparing for the release of official US oil inventory data.

By 0648 GMT, Brent crude futures were down by 4 cents, trading at $74.18 per barrel. Similarly, U.S. West Texas Intermediate crude futures dipped 2 cents to $70.37 per barrel. Both benchmarks experienced declines on Wednesday, marking their lowest closing prices since October 2 for the second consecutive day.

So far this week, oil prices have decreased by 6-7 per cent after the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) revised their demand forecasts for 2024 and 2025 downward.

Additionally, risk premiums have lessened as concerns over a potential retaliatory strike by Israel on Iran that could disrupt oil supplies have eased, although uncertainty regarding the ongoing conflict in the Middle East persists.

Tony Sycamore, a market analyst at IG in Sydney, explained, “We are currently in a waiting phase for two significant developments. First, we are looking for details from the China National People’s Congress regarding the size and specifics of the anticipated fiscal stimulus package.” Investors are particularly keen on updates from Beijing following its announcement on October 12 to stimulate its struggling economy.

On Thursday, China revealed plans to expand a list of housing projects eligible for financing and to boost bank lending for these developments to 4 trillion yuan (approximately $562 billion) in an effort to support its faltering property market.

Sycamore also highlighted Israel’s forthcoming response to a recent attack from Iran as another major point of focus for the oil market. “We know it’s coming, but the timing remains uncertain,” he noted, adding that these factors could potentially drive crude oil prices higher.

In Iran, authorities are currently addressing an oil spill off Kharg Island, as reported by the IRNA news agency. Analysts from ANZ stated, “This incident seems unrelated to the Israel-Hamas conflict but has drawn attention to Iran’s oil export infrastructure.”

In the U.S., there were unexpected declines in crude oil and fuel stocks last week, as reported by market sources referencing American Petroleum Institute figures. Contrary to expectations of an increase in crude inventories, crude stocks fell by 1.58 million barrels for the week ending October 11. Gasoline inventories also decreased by 5.93 million barrels, while distillate stocks dropped by 2.67 million barrels.

Analysts had predicted an average increase of about 1.8 million barrels in crude inventories for the same period. “Weak demand signals in the upcoming Energy Information Administration (EIA) weekly inventory report could further exert downward pressure on oil prices,” ANZ analysts warned. The EIA is set to release its data at 11 a.m. EDT (1500 GMT) on Thursday.

Additionally, oil prices may find support as the European Central Bank is expected to implement another interest rate cut on Thursday, marking its first consecutive cut in 13 years, as it shifts focus from tackling inflation to bolstering economic growth.

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