Oil rose on Wednesday. The market consolidated its position near the 10-month peak reached in previous transactions, as supply concerns regarding OPEC+ cuts, as well as supply concerns regarding Libyan production caused by disasters, offset global macroeconomic negativities.
It was reported that 5,300 people died and thousands of people went missing in the flood that affected the east of Libya. It was stated that 25 percent of the city of Derne, which was flooded as a result of the collapse of two dams, was under water. More than 5 thousand people lost their lives, most of them in Derne, and more than 10 thousand people went missing in the flood that occurred after the storm. A report published last year claimed that the disaster in Derne was predicted but no precautions were taken.
Brent futures 8 cents or 0.1% as of 06:30 GMT
rose to $92.14 per barrel, while West Texas Intermediate (WTI) crude oil rose 13 cents, or 0.2%, to $88.97 per barrel.
Both indicators closed at their highest levels since November 2022, up nearly 2% on Tuesday.
OPEC and the US Energy Information Administration’s (EIA) expectation of rising demand due to the decline in global oil stocks strengthens the market’s views that supply will tighten in the future.
News that OPEC member Libya closed four of its eastern oil export terminals due to the deadly storm also supported oil prices.
However, further gains may be limited due to downward pressure from ongoing concerns about weak demand in China.
The Organization of the Petroleum Exporting Countries (OPEC) has stuck to its forecast for strong growth in global oil demand in 2023 and 2024, citing signs that major economies are doing better than expected despite headwinds such as high-interest rates and high inflation.
Keeping supplies tight, OPEC+ allies Saudi Arabia and Russia last week extended voluntary supply cuts totaling 1.3 million barrels per day until the end of the year.
According to an interview with Russian Energy Minister Nikolai Shulginov, Russian oil production is expected to decline 1.5% this year to 527 million metric tons (10.54 million barrels per day).
Meanwhile, the EIA said global oil inventories are expected to decrease by almost half a million barrels in the second half of 2023, which will cause oil prices to rise with Brent averaging $93 per barrel in the fourth quarter.
Front-month Brent futures contracts traded $4.68 a barrel above six-month forward deliveries on Tuesday; A gap last seen in November last year suggests market supply is tightening further in the near term.
But US crude oil, distillate, and gasoline inventories rose last week, according to market sources citing Wednesday figures from the American Petroleum Institute (API).
Crude oil inventories rose by about 1.2 million barrels in the week ended September 8, contrary to analysts’ forecasts for a decline of about 1.9 million barrels. Gasoline stocks increased by approximately 4.2 million barrels, while distillate stocks increased by approximately 2.6 million barrels.
The market is also awaiting US inflation data due on Wednesday. The annual core consumer price index increase is expected to slow from 4.7% in July to 4.3% in August. Investors will focus on whether a softer core inflation reading will be enough for the Fed to keep interest rates steady next year.