An Aramco employee walks near an oil tank at Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Saudi Arabia, May 21, 2018. Portal/Ahmed Jadallah/File Photo ACKNOWLEDGE RIGHTS
Sept 29 (Portal) – Oil prices were expected to rise around 2% weekly after regaining ground on Friday as strong holiday demand from China and continued tight U.S. fundamentals outweighed expectations of possible supply increases from Saudi Arabia.
November Brent futures expiring on Friday rose 5 cents to $95.43 a barrel. Brent December futures rose 13 cents to trade at $93.23 a barrel at 0335 GMT.
U.S. West Texas Intermediate (WTI) crude rose 16 cents to $91.87 a barrel.
In the previous session, the market fell about 1% as traders took profits after prices rose to a 10-month high and some feared that high interest rates could weigh on oil demand.
Better macroeconomic data from China, the world’s largest oil importer, coupled with strong fuel demand as the country began its week-long Golden Week holiday on Friday, supported prices.
“(An) increase in international travel during Golden Week is boosting Chinese oil demand,” ANZ analysts said in a note to clients.
Domestic travel is also expected to boost demand. Data from the flight app Umetrip shows that the average number of flights booked daily is a fifth higher than in Golden Week in 2019, i.e. before Corona.
Factory activity in China likely stabilized in September, according to a Portal poll. This adds to a range of indicators that suggest the world’s second-largest economy has begun to stabilize, which could further boost demand. Official data is expected on Saturday.
The U.S. economy maintained a fairly solid pace of growth in the second quarter and activity appears to have accelerated this quarter, data showed on Thursday, suggesting that strong fuel demand could continue.
The backdrop of tight supplies in the U.S. provided further price support as inventories in Cushing, Oklahoma, the delivery point for U.S. crude oil futures, were already at their lowest level since July 2022.
“U.S. oil production is also expected to slow due to the declining number of drilling rigs. Lower supply and record global demand of 103 million barrels per day could push the market into a deficit of more than 2 million barrels per day in the final quarter.”
Traders are waiting for next week’s meeting of the Organization of the Petroleum Exporting Countries and its allies, collectively called OPEC+, for clues on whether Saudi Arabia might want to increase supply after prices rose nearly 30% this quarter.
“There is likely a reluctance among participants to push too much higher at the moment as the market is clearly in overbought territory,” ING Bank analysts said in a note to clients.
“There may also be fears that OPEC+, and Saudi Arabia in particular, could start easing cuts earlier than planned if prices rise significantly,” they added.
The OPEC+ ministerial board meeting is scheduled for October 4th.
“Next week’s OPEC meeting will be an important update for the market as the likelihood of voluntary supply cuts by Aramco increasing,” National Australia Bank analysts said in a note to clients.
Reporting by Katya Golubkova; Editing by Jamie Freed and Sonali Paul
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