Crude oil prices began trading with a loss this week as the momentum of last week's robust demand expectations fizzled out following a U.S. consumer demand survey last Friday.
The University of Michigan's consumer sentiment index fell to 65.6 in June, from 69.1 in May as worries about inflation and income deepened, Reuters reported. As a result, the first day of trade this week saw Brent crude slip closer to $82 in mid-morning Asian trade while West Texas Intermediate approached $78 per barrel.
"Last week's robust rally was fuelled by forecasts of strong 2024 demand from OPEC+ and the IEA. However, given OPEC's vested interest in crude oil, there is some skepticism around OPEC's forecasts," IG analyst Tony Sycamore told Reuters.
OPEC released its monthly oil market report last week, keeping its demand growth forecast for the year unchanged at over 2 million bpd. However, the IEA also released a new market report last week, and, as has become usual, had very different projections for both demand and supply. In fact, the IEA forecast a "staggering" supply overhang of 8 million bpd in spare production capacity by 2030. The forecast angered OPEC, which called the prediction "dangerous" and warned it could inject additional volatility into oil markets.
Bloomberg, on the other hand, noted that oil prices were still holding on to their biggest gain since April, made last week, but could change when traders processed the latest data from China. That data included retail sales, which rose in May, and industrial output, which disappointed.
Retail sales in China added 3.7% last month, rising from 2.3% in April in what was the fastest pace of growth since February, per Reuters. Industrial output also rose by a pretty solid 5.6% last month. However, traders had expected 6% in growth, making any lower number disappointing and affecting their oil-trading decisions.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
U.S. Gasoline Prices Post Super Rare Double-Digit Weekly Drop
Oil Prices Fall After API Reports Large Surprise Builds in Crude And Products
The Pipeline Project Preparing for Canada’s Largest Ever Corporate Bond Deal
Oil Price Plunge Hits BP and Shell Shares
Washington Looking to Revive More Shuttered Nuclear Plants
Comments
Try to fizzle out Friday
NN = Negative Narrative