Oil Prices Set for Weekly Gain Despite Mixed Data

Crude oil prices looked set for a weekly gain earlier today, as market players turned optimistic about demand despite conflicting signals from OPEC and the IEA.

Earlier in the week, OPEC reiterated its forecast for robust oil demand growth of over 2 million barrels daily this year. On the other hand, the IEA warned of a looming supply excess of as much as 8 million bpd on the back of a demand slump and overinvestment in production capacity.

OPEC blasted the IEA for its warning, calling it dangerous and saying it could lead to excessive volatility in oil markets.

Some net-zero scenarios suggest that oil should not be part of a sustainable energy future, OPEC secretary-general Haitham Al Ghais wrote in a column for EA Forum.

“This narrative was repeated only yesterday when the IEA published its Oil 2024 report in which it once again stated that oil demand would peak before 2030,” he said. 

“It is a dangerous commentary, especially for consumers, and will only lead to energy volatility on a potentially unprecedented scale.”

This exchange apparently infused oil traders with optimism about demand, along with some other news such as a profit warning by a Belgian battery material maker who cited a sharp slowdown in EV adoption as the reason for its revision.

Another bullish news for oil was Goldman Sachs’ forecast about strong fuel demand this driving season in the United States despite little evidence of such demand. In its latest weekly inventory report, the EIA estimated the second gasoline build in a row, at 2.6 million barrels.

On the bearish side, the Fed postponed rate cuts at its meeting this week. While expected, the move disappointed oil bulls and turned them more bearish.

Countering this sentiment, Russia reported it had exceeded its OPEC+ production quota in May but will make an effort to stick to it going forward.

"Stricter adherence to the current quotas should more than offset any potential increases from the group of eight under the gradual phase out of their voluntary cuts. This should see the crude oil market remain well supported over the next 18 months," ANZ analysts said, as quoted by Reuters.

By Irina Slav for Oilprice.com

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