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Oil futures closed higher on Wednesday despite an unexpected 3.7 million barrel increase in U.S. crude inventories and the International Energy Agency’s forecast of an “alarming” oil glut by the end of the century.
IEA expects oil demand growth to peak in 2029 It will start to shrink next year and will reach 105.4 million barrels per day by 2030 as clean energy technologies accelerate, while oil production capacity will increase to 113.8 million barrels per day, driven by US and American producers.
“This would lead to spare capacity reaching levels not seen outside the peak of the COVID-19 lockdowns in 2020,” the IEA warned. “Such a large oil production buffer could bring about a lower oil price environment, giving the U.S. shale oil region and OPEC+ producers pose serious challenges.”
Dennis Kissler of BOK Financial said Wednesday’s statement from the International Energy Agency about slowing oil demand growth and surging supply was negative for oil, but “most traders are taking it with a pinch of salt as global refinery demand remains,” according to Dow Jones ” , while the EV boom for EV growth appears to be slowing. “
At the same time, U.S. crude oil inventories unexpectedly increased last week, increasing by 3.7 million barrels to 459.7 million barrels, compared with expectations for a decrease of 1.2 million barrels. Domestic gasoline inventories increased more than expected, increasing by 2.6 million barrels to 233.5 million barrels.
Crude oil prices were supported by lower-than-expected U.S. inflation data in May, while the Federal Reserve kept interest rates unchanged as expected, but is expected to cut interest rates only once this year.
Nymex front-month crude oil (CL1:COM) for July delivery has been settled +0.7% To $78.50/barrel, front month August Brent crude oil (CO1:COM) closed +0.8% to $82.60/barrel, the fifth time both benchmarks have risen in the past six sessions.
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Citi analysts painted a bleak picture for the oil market in a new report on Wednesday, predicting that Brent crude oil prices will fall to $60 per barrel in a year’s time.
Citi believes the global oil balance will move into a “meaningful surplus” even if OPEC and its allies extend production cuts until the end of next year, and it expects that to follow if the group goes ahead with its recent plan to lift some of the cuts. It’s a “very large surplus.”
Citi’s oil price level is lower than that of all peers: Brent crude oil prices are expected to fall to $74/barrel in the fourth quarter, open at $65/barrel in 2025, and fall to $60/barrel in the second and third quarters. barrel, ending next year at $55/barrel; WTI price forecast is down by about $4/barrel.
The bank believes copper is the hottest commodity in 2024-25, predicting prices will soar to $12,000 per ton next year, and recommends investors go long on the metal while short crude oil.
