Commodities
Oil prices settle higher to wrap up weekly gain as economic data lift demand hopes
![](https://letizo.com/wp-content/uploads/2024/05/oil-prices-settle-higher-to-wrap-up-weekly-gain-as-economicdata-lift-demand-hopes_6649fd63b66a6.jpeg)
Investing.com — Oil prices settled higher Friday, wrapping up the week with a win as signs of slowing U.S. inflation boosted rate cut hopes just as China rolled out more stimulus, giving a big boost to hopes for firmer demand.
At 14:30 ET (19:30 GMT), rose 0.8% to $83.92 a barrel and gained 0.9% to $79.57 a barrel.
Both contracts ended the week with gains of between 0.9% and nearly 1%, with a bulk of gains coming after U.S. readings came in softer than expected.
Weekly gains likely
The April CPI reading battered the and increased expectations that the Federal Reserve could begin trimming rates as soon as September, with looser monetary conditions boding well for crude demand.
But this notion was somewhat offset by a string of Fed officials warning that the central bank needed more convincing that inflation was coming down, before it could begin trimming rates.
Baker Hughes rig count up
Oilfield services firm Baker Hughes reported Friday its weekly U.S. rig count rose by one to 497.
The positive end to the week for oil prices comes ahead of CFTC positioning data slated for release later in the day that will signal how healthy appetite is for bullish bets on oil.
Oil markets see mixed cues
Crude markets were also grappling with mixed cues on demand this week. A bigger-than-expected draw in U.S. pushed up optimism over improving demand as the travel-heavy summer season approaches.
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But this was offset by the International Energy Agency slightly trimming its annual demand forecast, citing uncertainty over the global economy amid sticky inflation and potentially high for longer rates.
On the other hand, the Organization of Petroleum Exporting Countries maintained its demand forecast for 2024, citing an eventual economic recovery in China and potentially lower interest rates later in the year.
The OPEC is also expected to maintain its current pace of production cuts beyond end-June, presenting a tighter outlook for supply.
“Oil inventories falling by less than we had expected in recent weeks and U.S. interest rates staying higher for longer are likely to have an impact on OPEC+’s policy of being proactive, preemptive, and precautionary,” said analysts at UBS, in a note dated May 14.
“We now expect the eight member states with voluntary production cuts to extend them by at least three months ahead of the ordinary meeting at the beginning of June.”
More China cues on tap
China said it will begin a massive, $1 trillion bond issuance this week- Beijing’s first major act of fiscal stimulus as it struggles to shore up a sluggish economic recovery.
Chinese grew more than expected in April, indicating that a recovery in the country’s massive manufacturing sector remained on track amid increased government support.
But signs of weak consumption in the country persisted, as growth in largely missed expectations in April, while China’s new home prices fell at the fastest monthly pace in over nine years.
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China is widely expected to hold benchmark lending rates steady on Monday, although expectations are growing for a cut in the mortgage reference rate as the authorities scramble to boost housing.
(Peter Nurse, 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
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(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
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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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