Oil Prices Inch Higher on U.S. Strategic Reserve Purchase
Oil Prices Rise on U.S. Strategic Reserve Purchase
Oil prices increased on Monday, with U.S. efforts to replenish strategic reserves providing support for a second consecutive session. However, concerns of crude oversupply and softer fuel demand growth next year continued to linger.
Oil Futures Continue to Rise
Oil futures rose 0.2% to $75.95 a barrel, while U.S. West Texas Intermediate crude futures were up 0.1% at $71.30 a barrel. Despite the gains, both contracts experienced their seventh straight week of declines, the longest streak since 2018, due to ongoing oversupply concerns.
U.S. Seeks to Refill Strategic Petroleum Reserve
The recent price weakness prompted the U.S. to seek up to 3 million barrels of crude for the Strategic Petroleum Reserve (SPR) for delivery in March 2024, providing support for oil prices.
Market Analyst’s Perspective
IG analyst Tony Sycamore noted that the Biden Administration’s efforts to refill the SPR and technical chart indicators are providing support to oil prices.
Market Skepticism and Forecasts
Investors remain skeptical about supply cuts from OPEC+ members as output growth in non-OPEC countries is expected to lead to excess supply next year. RBC Capital forecasts stock draws of 700,000 bpd in the first half but only 140,000 bpd for the full year.
Impact of Chinese Economic Data
China, the world’s top oil importer, reported rising deflationary pressures as weak domestic demand cast doubt over the economic recovery. Chinese officials pledged to spur domestic demand and enhance the economic recovery in 2024.
Upcoming Market Events
This week, investors are keeping an eye on interest rate policies from meetings at five central banks, including the Federal Reserve, and data on U.S. inflation, for their impact on the global economy and oil demand.
