Oil futures: Brent surges 4% as risk-on sentiment returns
Quantum Commodity Intelligence – Crude oil futures Thursday were sharply higher as benchmarks continued to pull away from this week's five-month lows following a run of upbeat news and indicators.
Front-month Feb24 ICE Brent futures were trading at $77.25/b (1750 GMT), compared to Wednesday's settle of $74.26/b, as markets fully regained the week's erstwhile losses.
At the same time Jan24 NYMEX WTI was trading $72.35/b versus Wednesday's settle of $69.67/b.
Markets rebounded with the risk-on mood returning to the oil sector as the US signalled possibly three rate cuts for 2024, a bullish assessment from OPEC for next year's oil demand, plus the drop in US crude stocks.
Markets rallied following the Fed's rate decision to keep rates at the 5.25% to 5.50% target range unchanged.
"While this was widely expected, the Fed Dot Plot indicated three rate cuts to 4.6% by the end of 2024. Chair Powell said the interest rate was or near its peak, which further boosted risk-on sentiment," said CMC Markets analyst Tina Teng, noting the Dow Jones Index hit an all-time high in topping 37,000.
OPEC also helped steady markets midweek with an upbeat forecast for next year, with many expecting it to trim expectations for 2024 demand as a reason behind its recently announced voluntary production cuts.
However, OPEC sees demand growth of 2.25 million bpd next year, unchanged from its November forecast, and blamed "exaggerated concerns" about demand for a recent drop in prices.
Consumption
World consumption will rise by 1.1 million barrels per day in 2024, the Paris-based IEA said in a monthly report, up 130,000 bpd from its previous forecast.
The International Energy Agency on Thursday said consumption will rise by 1.1 million barrels per day in 2024, which, although considerably below OPEC's upbeat outlook, was a 130,000 bpd upward revision versus the Paris-based agency's previous forecast.
The agencies had been at loggerheads over the demand prognosis for 2024, but the IEA's move closer towards OPEC's viewpoint was viewed as a bullish signal.
Oil prices also steadied midweek as EIA data showed commercially-held crude oil stocks in the US dropped by over 4 million barrels for a second straight week to a one-month low as imports slowed again, while domestic refining rebounded.
Stocks held by US-based energy companies shrank by 4.2 million barrels in the week to December 8, leaving stocks just above 440 million barrels, its lowest in a month although remaining nearly 6.5% higher than year-ago levels, the data showed.
