The Organization of the Petroleum Exporting Countries (OPEC) bloc, led by Saudi Arabia has retained its forecast for demand growth for 2024 and 2025, amid constant tensions in the Middle East. The oil producer group however, raised its global economic growth forecast for this year saying that there was more room for improvement.
After the projections, international crude oil prices were little changed in today’s session with the benchmark Brent futures for May delivery were up 24 cents sticking at $82.45 per barrel. The April US West Texas Intermediate (WTI) crude contract was higher by 31 cents at $78.24, according to news agency Reuters.
Also Read: Explained | Why did OPEC+ members extend oil output cuts to mid-2024
OPEC projections for oil demand, economic growth
OPEC said in a monthly report that world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both projections were unchanged from last month. OPEC said that the robust global economic growth towards the end of 2023 is likely to extend into the first half of 2024.
With this, OPEC raised its 2024 economic growth forecast by 0.1 percentage points, following a hike last month. OPEC’s growth projections are higher than the Paris-based International Energy Agency (IEA).
OPEC now sees a global economic growth of 2.8 per cent in 2024, driven by the expectation of a continued easing in general inflation throughout the year. The producer group has kept next year’s forecast steady at 2.9 per cent.
Last week, OPEC decided to extend voluntary oil output cuts of 2.2 million bpd into the second quarter or mid-2024. Saudi Arabia, the dominant member of the OPEC group, said it would extend its supply cut of one million bpd through the end of June, leaving its total output at around nine million bpd –well below its capacity of 12 million bpd.
Oil Prices Outlook
On the domestic front, crude oil futures were last trading 0.7 per cent higher at ₹6,488 per barrel against a session’s high of ₹6,513 per barrel on the multi commodity exchange (MCX) today.
Crude oil exhibited significant price volatility, rebounding from its lows amid a weakening dollar index. Additionally, crude oil prices saw a recovery just before the scheduled monthly demand reports from OPEC+ and IEA this week, according to analysts.
In an earlier report, OPEC+ predicted strong demand for 2024 and 2025, whereas the IEA expressed concerns about global oil demand due to a slowdown in China. Nonetheless, the weakening dollar index and anticipation of interest rate cuts are offering support to crude oil prices, as per analysts.
‘’We anticipate that crude oil prices will continue to be volatile in today’s trading session. Crude oil has support levels at $76.90–$76.30 and faces resistance at $78.30–$78.90 in today’s session. In terms of the INR, crude oil is supported at ₹6,360– ₹6,290, with resistance levels at ₹6,510– ₹6,580,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
With inputs from Reuters
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