Oil came under pressure yesterday as broader markets continue to question the Federal Reserve’s path this year when it comes to cutting rates. This is particularly because US retail sales data for December yesterday came in above expectations. As a result, ICE Brent closed down just over 0.5%. The change in views on the Federal Reserve’s actions has been more than enough to offset concerns in the Red Sea. Another commercial ship was attacked yesterday, bringing the total so far this week to three. The fact that increasing numbers of ships are avoiding the Red Sea is clearly detrimental to trade flows. However, for now, the evolution of the oil price suggests that the market assumes that we do not see an escalation of the situation.
According to Bloomberg, oil production in North Dakota has fallen further due to frigid weather conditions, with output falling to 650,000 to 700,000 b/d, down from around 650,000 b/d earlier in the week. Although expectations are that the bulk of this production will return in the coming days.
Overnight US oil inventory figures from the API were bearish. U.S. crude oil inventories rose by a marginal 483,000 barrels last week. However, products again saw large increases, with gasoline and distillate stocks growing by 4.86 million barrels and 5.21 million barrels, respectively. The more closely watched EIA inventory report will be released later today.
OPEC published its latest monthly market report yesterday, which included its first estimates for 2025. The group left its demand growth forecast for 2024 unchanged at 2.25 mb/d, while for 2025, the demand grows 1.85 mb/d. On the supply side, non-OPEC production is expected to grow by 1.34 mb/d this year and 1.27 mb/d in 2025. As a result, OPEC oil demand in 2024 will be 28. 5 mb/d and 29 million b/d in 2025. This is well above the 26.7 mb/d produced by OPEC in December (excluding Angola), suggesting that OPEC expects the market to be in deficit Pretty big this year.
On today’s schedule, the IEA will release its latest monthly report on the oil market, which will include its latest outlook for 2024. The EIA will also release its weekly report on US oil inventories, as well as its report on the US natural gas storage Given the colder weather seen in the US, the market expects US gas storage to have fallen by around 165 Bcf over the past week, which would be above the five-week average. years of around 126 Bcf.