Oil prices increase slightly despite weak demand outlook
Crude prices in global markets have climbed slightly despite weak outlook for possible rise in oil demand and continued market oversupply.
During Tuesday trading, US benchmark West Texas Intermediate for delivery in October gained 28 cents compared with Monday’s close to be sold for USD 44.28 a barrel, AFP reported.
Meanwhile, price of Brent North Sea crude for October delivery also increased by nine cents to hit USD 46.46 a barrel around midday in London.
However, analysts believed that expectations about expansion of US crude oil inventories for the third week in a row and revelations about OPEC cutting its demand growth forecast for next year helped to keep oil prices from rising any further.
Meanwhile, Bloomberg News announced that according to its estimate, US crude stockpiles may have risen by 1.75 million barrels in the week to September 4.
The US Energy Information Administration is expected to release the official data on US crude stockpiles on Wednesday, which is generally viewed as a gauge of crude demand in the world’s top oil consuming nation.
“Prices are unable to make much headway as the market expects US crude stockpiles to expand for the third straight week ahead of the EIA report,” said Bernard Aw, a Singapore-based market strategist at IG Markets.
The Organization of the Petroleum Exporting Countries cut its 2016 global demand forecast on Monday “due to the projected slower economic momentum in Latin America and China.”
OPEC added that demand would grow by 1.29 million barrels per day to 94.08 million barrels a day next year, which would be 50,000 barrels a day less than its previous estimate.
Traders are also waiting for the US Federal Reserve meeting this week to see whether it would raise interest rates for the first time since 2006.
Analysts say an increase in the zero-level benchmark rate would likely push the dollar higher, making dollar-priced commodities, including crude oil, more expensive, thus, potentially pushing crude demand further down.