Crude oil and gas prices trade higher but remain at low levels for the month
About Report Demand Opec The Eases Market Of Countries: Concerns Flags
The prices of both crude oil and European wholesale gas edged higher in the trading session, following large falls in recent weeks that were triggered by concerns about the health of major world economies.
The price of Brent crude oil rose by 1.5% to $82.70 a barrel after the monthly market report from the Organisation of Petroleum Exporting Countries eased market concerns about waning demand in the US and China.
Gas prices rose by over 1% to trade at €47.20 per megawatt hour.
In the report, Opec said that oil market fundamentals remained strong and blamed speculators for a recent sharp drop in prices.
Opec made a slight increase to its 2023 forecast for global oil demand growth and stuck to its relatively high 2024 prediction.
"The Opec monthly oil market report appeared to push back against demand concerns, referencing overblown negative sentiment around Chinese demand while raising demand growth forecasts for this year and leaving them unchanged for next," Craig Erlam, senior market analyst at Oanda, said.
Investors had been worried after the U.S. Energy Information Administration (EIA) said last week that the country's crude oil production this year will rise by slightly less than previously expected and that demand will fall.
Weak economic data last week from China, the world's biggest crude oil importer, also raised fears of faltering demand. Chinese refiners asked for less supply for December from Saudi Arabia, the world's largest exporter.
Still, oil prices may have found a bottom after they slid about 4% last week and recorded their first three-week declining streak since May, said Fawad Razaqzada, an analyst at City Index.
"Given that oil prices have weakened in the last few weeks, Saudi Arabia and Russia will likely continue with their voluntary supply cuts into next year. This should therefore limit the downside potential," Mr Razaqzada said.
Last week, top oil exporters Saudi Arabia and Russia, part of the group known as Opec+, confirmed they would continue with additional voluntary oil output cuts until the end of the year as concerns over demand and economic growth continue to drag on crude markets.
The next Opec+ meeting is scheduled for November 26.
Meanwhile, the price of European gas fluctuated, with traders weighing winter risks against reduced concerns about short-term supplies from the Middle East.
Windy weather and above-normal temperatures are expected to spread to other parts of Europe this week, exerting pressure on prices.
In addition, Israel’s gas flows to Egypt have increased after Chevron resumed output at its major Tamar field, meaning more capacity for liquefied natural gas exports to Europe from the North African country.
Yet, winter risks remain in focus, and some weather models point to a potential cold snap later this month. For now, Goldman Sachs analysts expect European gas prices to remain flat in the next few months.
But “supply disruptions, a colder winter, and reduced conservation are upside risks to our forecast”, researchers led by Samantha Dart wrote. Irish Examiner, Reuters, Bloomberg