ALBAWABA – Brent crude oil prices slipped slightly Wednesday, having risen significantly over the past two days on expectations that demand will outgrow supply in 2023, news agencies reported.
Brent futures rose $1.71 late Tuesday, or 2.2%, to $79.40 a barrel, before shedding approximately $0.06 Wednesday morning, to settle at $79.46, as reported by Reuters.
Meanwhile, United States (US) West Texas Intermediate (WTI) crude oil prices continued to rise for a third session, reaching $74.88 a barrel by Wednesday.
Brent futures in London traded near $80 a barrel, a threshold that was last breached in early May, according to Bloomberg.
Traders and investors are on the lookout for US inflation data, which would corroborate the Federal Reserve’s announcement of further interest rate hikes soon. Higher rates affect demand and oil prices.
Brent has exceeded its 100-day moving average, which could spur further demand, as per Bloomberg.
In the meantime, the US dollar has also weakened for a fourth session, making oil cheaper for international investors and importers.
Forecasts bolster oil prices
Economists and analysts are predicting a shortage in oil supplies this year, as reported by Reuters. Ahead of the US Energy Information Administration (EIA) report, due to come out Wednesday.
The report is expected to find that demand will likely outgrow supply by nearly 100,000 barrels per day (bpd) in 2023 and 200,000 in 2024. A shortage in supply will certainly drive oil prices. But an increase in interest rates will likely weigh on oil prices.
The industry-funded American Petroleum Institute reported inventories rose by 3 million barrels last week, according to Bloomberg’s unnamed sources.
Traders will also be watching monthly reports, due on Thursday, from the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC).
The International Energy Agency (IEA) has said the oil market should remain tight in the second half of 2023 with recently-announced supply cuts, including cuts by top exporters Saudi Arabia and Russia.
On the other hand, the IEA and EIA both expect higher demand for oil in the second half of 2023 and well into 2024.
The EIA projected total US petroleum consumption, a proxy for demand, to rise by 100,000 bpd to 20.4 million bpd this year, and another 400,000 bpd to 20.8 million bpd in 2024, Reuters reported.
