Oil settles up 2% at 10-week high on weaker US dollar, rising demand forecasts (updated)
11/07/2023 03:07
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U.S. dollar falls to two-month low
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World oil supply and demand to hit record highs in
2023-U.S. EIA
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IEA expects tight market in second half of year
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Saudi and Russian output cuts support prices
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Upcoming - U.S. oil inventory data from API
(Adds latest prices)
By Scott DiSavino
NEW YORK, July 11 (Reuters) - Oil prices jumped on
Tuesday, settling up about 2%, boosted by a falling U.S. dollar,
hopes for higher demand in the developing world and supply cuts
by the world's biggest oil exporters.
Brent LCOc1 futures rose $1.71, or 2.2%, to settle at
$79.40 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1
rose $1.84, or 2.5%, to settle at $74.83.
Brent's settlement was its highest since April 28 and WTI's
since May 1. Brent was in technically overbought territory for
the second time in three days.
"The break of the recent high could be viewed as a bullish
step that could give (Brent) the momentum to break back above
$80," said Craig Erlam, a senior market analyst at OANDA. "The
rally still has momentum at this stage," he added.
U.S. diesel HOc1 futures were also on track for their
highest close since April 18.
The U.S. dollar .DXY dropped to a two-month low against a
basket of other currencies a day after several Federal Reserve
officials signaled the U.S. central bank was near the end of its
tightening cycle.
A weaker dollar makes crude cheaper for holders of other
currencies.
U.S. small business confidence climbed to a seven-month high
in June as pessimism about the economic outlook diminished
sharply and sales expectations improved, but a still-tight labor
market continued to drive concerns about inflation.
Markets were awaiting U.S. inflation data on Wednesday
for clues on the interest rate outlook. Higher rates can slow
economic growth and reduce oil demand.
The International Energy Agency (IEA) said the oil market
should remain tight in the second half of 2023, citing strong
demand from China and developing countries combined with
recently announced supply cuts, including by top exporters Saudi
Arabia and Russia.
The IEA will publish new forecasts this week.
The secretary general of the Organization of the Petroleum
Exporting Countries (OPEC) said global energy demand is forecast
to rise 23% by the end of 2045.
RECORD WORLD OIL SUPPLY AND DEMAND
The U.S. Energy Information Administration (EIA) projected
global oil output would rise from 99.9 million barrels per day
(bpd) in 2022 to 101.1 million bpd in 2023 and 102.6 million bpd
in 2024, while world demand will rise from 99.4 million bpd in
2022 to 101.2 million bpd in 2023 and 102.8 million bpd in 2024.
That compares with a record 100.5 million bpd of global oil
production in 2018 and a record 100.8 million bpd of world
liquids consumption in 2019.
EIA also projected U.S. crude output would rise from 11.9
million bpd in 2022 to 12.6 million bpd in 2023 and 12.9 million
bpd in 2024, while U.S. liquids consumption would rise from 20.3
million bpd in 2022 to 20.4 million bpd in 2023 and 20.8 million
bpd in 2024.
That compares with a record 12.3 million bpd of U.S. crude
production in 2019 and a record 20.8 million bpd of liquids
consumption in 2005.
The market is awaiting U.S. oil inventory data from the
American Petroleum Institute (API), an industry group, on
Tuesday and the EIA on Wednesday.
With analysts in a Reuters poll forecasting a 0.5-million
barrel increase in U.S. crude stocks during the week ended July
7, that inventory data could weigh on oil markets. EIA/S
ENERGYUSA API/S ENERGYAPI
If correct, it would be the first crude stock build in four
weeks and compares with an increase of 3.3 million barrels in
the same week last year and a five-year (2018-2022) average
decrease of 6.9 million barrels.
(Additional reporting by Natalie Grover in London, Arathy
Somasekhar in Houston and Sudarshan Varadhan in Singapore;
Editing by David Goodman, Mark Potter, David Gregorio and Leslie
Adler)
((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters
Messaging: scott.disavino.thomsonreuters.com@reuters.net))