Oil prices rebound 1% after dollar-related sharp declines
- By Reuters -
- Nov 14, 2024
Oil prices rose about 1% on Thursday, paring some of the sharp declines seen earlier this week due to a stronger US dollar and worries about rising supply amid slow demand growth.
Brent crude futures were up 70 cents to $72.98 a barrel at 1401 GMT. U.S. West Texas Intermediate crude futures were up 68 cents to $69.11.
“Oil prices have experienced significant declines recently, largely driven by a stronger U.S. dollar …, underwhelming Chinese economic stimulus efforts, and OPEC’s continued downward revisions of demand forecasts,” said Mohamed Hashad, an analyst at Noor Capital.
The dollar surged to a one-year high on Thursday, extending gains from Wednesday’s seven-month high against major currencies after data showed U.S. inflation in October increased in line with expectations.
This, in turn, stoked worries of slowing demand in the U.S.
The market is “a concoction of weak demand factors,” with the latest worry being a rally in U.S. 10-year Treasury yields and a surge in the 10-year break-even inflation rate to 2.35%, said Kelvin Wong, senior market analyst at OANDA.
“(This) increases the odds of a shallow Fed interest rate-cut cycle heading into 2025 (and) overall, there is less liquidity to stoke an increase in demand for oil,” he added.
The International Energy Agency said on Thursday global oil supply will exceed demand in 2025 even if cuts remain in place from OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies like Russia, as rising production from the U.S. and other outside producers outpaces sluggish demand.
The Paris-based agency raised its 2024 demand growth forecast by 60,000 barrels per day (bpd) to 920,000 bpd, and left its 2025 oil demand growth forecast little changed at 990,000 bpd.
OPEC has trimmed its oil demand growth forecasts for this year and next, keeping them well above those of the IEA, however.
With slowing demand in China, there are few supply-demand factors supporting bullish oil markets, said Tina Teng, an independent market analyst.