Commodities
Oil prices edge lower ahead of US inflation data; OPEC maintains forecasts
![](https://letizo.com/wp-content/uploads/2024/05/oil-prices-edge-lower-ahead-of-us-inflation-data-opecmaintains-forecasts_664365e9b3f03.jpeg)
Investing.com – Oil prices edged slightly lower Tuesday, handing back some of the previous session’s gains in cautious trade ahead of key U.S. inflation data, while OPEC+ kept its demand and supply forecasts unchanged.
AT 08:05 ET (12:05 GMT), fell 0.3% to $83.11 a barrel, while fell 0.4% to $78.84 a barrel.
Both contracts rose more than 1% each on Monday.
Trading ranges have been limited Tuesday due to caution ahead of key U.S. inflation data, which is likely to factor into the outlook for interest rates in the U.S. , the world’s largest consumer of energy
China outlines fiscal stimulus plans
There had been a positive tone on Monday after China’s finance ministry said that it plans to start raising 1 trillion yuan ($138 billion) through a long-awaited bond issuance this week.
The issuance is aimed chiefly to stimulate key aspects of China’s sluggish economy, and will entail the issuance of special government bonds with tenors of 20 to 50 years.
Chinese ministers said the bonds will be used to shore up sluggish economic growth, and will be deployed towards key sectors including infrastructure.
While the issuance was largely telegraphed by Chinese authorities, its confirmation still factored into some optimism over improving economic conditions in the world’s biggest oil importer.
The bond issuance came after mixed inflation readings over the weekend raised some concerns over a sustained economic recovery in China. While consumer inflation rose, producer inflation shrank for a 19th consecutive month.
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Canadian wildfires could cause potential supply disruptions
Additionally, major wildfires spread across Western Canada, presenting the potential for disruptions in Canadian oil and gas supplies, especially as they neared a key oil hub.
Residents of Fort McMurray, Alberta, were put on alert as the province saw two “extreme” wildfires. The city is the closest settlement to Canada’s biggest oil-sands operations, and had in 2016 suffered severe damage from wildfires.
Still, rain in the region helped decrease the immediate threat from the fires, although residents were still kept on alert.
Any worsening in the wildfires present the prospect of supply disruptions in Canada’s massive oil and gas industry, which is a key part of North American crude markets.
Canada’s worst-ever wildfire season, seen in 2023, knocked out as much as 300,000 barrels of production a day. In 2016, damage to Fort McMurray had put about 1 million barrels per day out of commission.
Uncertainty over OPEC meeting
What the group of top producers, known as OPEC+, decides to do with supply at its next meeting at the beginning of June is also causing uncertainty within the crude markets.
Iraq’s oil minister, Hayyan Abdul Ghani, is reported to have said over the weekend that his country would honour voluntary output cuts made by OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers, at its upcoming meeting on June 1.
That reversed course from his Saturday comments that Iraq had made enough voluntary reductions and would not agree to any new output cuts.
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“The lack of price direction more recently is no surprise given the uncertainty over what OPEC+ members may do with their additional voluntary supply cuts,” analysts at ING said, in a note.
OPEC, earlier Tuesday, maintained its global oil supply and demand forecasts unchanged for 2024 and 2025 in its , leaving the call on OPEC+ crude at 43.2 million barrels a day this year, rising to 44 million barrels per day in 2025.
(Ambar Warrick contributed to this article.)
Commodities
Oil prices settle lower after weak August jobs report adds to demand concerns
![](https://letizo.com/wp-content/uploads/2024/09/oil-prices-settle-lower-after-weak-august-jobs-report-addsto-demand-concerns_66dc53fb8f210.jpeg)
Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
Commodities
Goldman Sachs expects OPEC+ production increases to start in December
![](https://letizo.com/wp-content/uploads/2024/09/goldman-sachs-expects-opec-production-increases-to-start-indecember_66dc53f61803f.jpeg)
(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.
However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.
The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.
“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.
Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]
Commodities
Citi, Bank of America see oil prices potentially going to $60
![](https://letizo.com/wp-content/uploads/2024/09/citi-bank-of-america-see-oil-prices-potentially-going-to60_66db0275685ed.jpeg)
Investing.com — Strategists at Citi Research said oil prices could decline to around $60 per barrel by 2025, citing a significant market surplus as the primary driver.
While recent supply disruptions in Libya and a delayed production cut unwinding by OPEC+ have offered short-term support for Brent prices in the $70-72 range, Citi views this as temporary.
“At the time of writing, markets have not reacted to the OPEC+ decision, with Brent around flat to the 4 September close. Still, the Libyan situation could take months rather than a week to resolve, strategists wrote.
They highlight the likelihood of a strong market surplus emerging next year, pushing prices lower.
“We recommend selling on a bounce toward ~$80 Brent, as we look ahead to moves down to the $60 range in 2025 as a sizeable market surplus emerges,” the note states.
OPEC+ has delayed the start of its planned production cut unwind from October 2024 to December 2024, with the process now set to conclude by the end of 2025. This decision comes in response to recent market weakness and price declines, despite ongoing disruptions to Libyan oil supplies and broader economic concerns in the U.S. and China.
Separately, Bank of America’s Commodities Research team has revised down its price forecast to $75 per barrel for the second half of 2024, down from nearly $90, and for 2025, reduced from $80.
The team cites concerns about growing global oil inventories despite assuming OPEC+ will delay planned production increases. They note that weaker demand growth, combined with record OPEC+ spare capacity exceeding 5 million barrels per day, has dimmed the outlook for oil prices.
“In effect, we now see Brent oil prices moving from the top toward the middle of our unchanged $60-80/bbl medium-term range faster than previously warned,” BofA strategists said. This surplus in capacity, along with slower demand, also reduces the risk of price spikes from potential geopolitical disruptions.
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