The Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, has maintained its forecast for demand growth in 2024 and 2025 despite ongoing tensions in the Middle East. However, the group has revised upwards its global economic growth projections for the current year, citing room for improvement.
Following the release of these projections, international crude oil prices showed little change during today’s trading session. Brent futures for May delivery were up 24 cents, holding steady at $82.45 per barrel, while the April US West Texas Intermediate (WTI) crude contract saw an increase of 31 cents, reaching $78.24 per barrel, according to Reuters.
In its monthly report, OPEC stated that world oil demand is expected to increase by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025, figures consistent with last month’s projections. The group attributed this stability in demand growth to robust global economic growth witnessed towards the end of 2023, which is anticipated to continue into the first half of 2024.
Furthermore, OPEC has raised its 2024 economic growth forecast by 0.1 percentage points, now projecting a global economic growth of 2.8 percent for the year. This adjustment follows a previous increase in forecasts. Notably, OPEC’s growth projections surpass those of the Paris-based International Energy Agency (IEA).
Last week, OPEC announced its decision to extend voluntary oil output cuts of 2.2 million bpd into the second quarter or mid-2024. Saudi Arabia, the leading member of the OPEC group, confirmed it would extend its supply cut of one million bpd through the end of June, maintaining its total output at around nine million bpd, well below its capacity of 12 million bpd.
Turning to domestic markets, crude oil futures on the multi-commodity exchange (MCX) were trading 0.7 percent higher at ₹6,488 per barrel, reaching a session’s high of ₹6,513 per barrel. Market analysts noted significant price volatility in crude oil, which rebounded from its lows amid a weakening dollar index. Additionally, prices recovered just before the scheduled monthly demand reports from OPEC+ and IEA this week.
While OPEC+ predicts strong demand for 2024 and 2025, the IEA has expressed concerns about global oil demand due to a slowdown in China. However, analysts suggest that the weakening dollar index and anticipation of interest rate cuts are providing support to crude oil prices.
Rahul Kalantri, VP Commodities at Mehta Equities Ltd., anticipates continued volatility in crude oil prices during today’s trading session. He highlighted support levels at $76.90–$76.30 and resistance at $78.30–$78.90, alongside support at ₹6,360–₹6,290 and resistance at ₹6,510–₹6,580 in terms of the Indian Rupee (INR).