The Organization of Petroleum Exporting Countries, OPEC, remains positive on the oil demand outlook just as oil prices fell slightly on Thursday, with Brent crude holding close to January highs, as speculation about another U.S. interest rate hike faded following inflation data.
Both benchmarks have been on a sustained rally since June, with West Texas Intermediate Crude, WTI trading at its highest this year on Thursday and Brent hitting its highest price since January, while the Brent crude fell 72 cents to $83.68 a barrel.
The WTI was down 46 cents at $87.09, after falling by $1 earlier in the session.
Oil prices have been boosted in recent days by extensions to output cuts by Saudi Arabia and Russia, alongside supply fears driven by the potential for conflict between Russia and Ukraine in the Black Sea region to threaten Russian oil shipments.
But recent data showed the consumer sector in China fell into deflation and factory gate prices extended declines in July, raising concerns about fuel demand in the world’s second-largest economy.
The U.S. is also prohibiting some investment in China in sensitive technologies like computer chips and requires government notification in other tech sectors.
“China’s data just gets worse and worse, and this is only going to make it more difficult for China to ramp up its economy,” said John Kilduff, partner at Again Capital LLC in New York.
Lending support to prices, OPEC said in its monthly report on Thursday it expected a healthy oil market for the rest of the year, and stuck by its forecast for robust oil demand in 2024, as the outlook for world economic growth slightly improves.
Thursday’s U.S. consumer prices data for July fuelled speculation the Federal Reserve is nearing the end of its aggressive rate hike cycle.
Markets largely shrugged off a higher-than-expected 5.85 million-barrel build in U.S crude stocks reported on Wednesday, after a record drawdown the week before.