Oil prices declined in Asian markets on Tuesday following gains in the previous session, as apprehensions about global demand growth overshadowed expectations of increased supplies.
Brent crude futures, the global benchmark, dropped by 12 cents, or 0.14%, to $84.13 per barrel at 0615 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures fell 14 cents, or 0.17%, to $80.19 a barrel. Both benchmarks had surged around 2% on Monday, reaching their highest levels since April.
“The oil market shifted its focus back to fundamentals, which have been soft for some time,” stated Francisco Blanch, a commodity and derivatives strategist at Bank of America, in a client note. He noted that global crude oil inventories and refined product storage in the United States, Singapore, and other regions have increased.
Blanch highlighted that global oil demand growth slowed to 890,000 barrels per day year-on-year in the first quarter, with data indicating further deceleration in the second quarter.
China’s oil refinery output fell by 1.8% in May compared to the previous year, according to data released by the statistics bureau on Monday. This decline is attributed to planned maintenance overhauls by refiners and increased crude costs impacting processing margins.
Investors are also closely monitoring upcoming statements from U.S. Federal Reserve representatives later on Tuesday for indications on interest rates and the U.S. demand outlook.
Despite the cautious market sentiment, some analysts remain optimistic about the impact of the OPEC+ group’s supply cuts. “The latest guidance provided by OPEC+, along with their unchanged demand growth outlook of 2.25 million barrels per day, suggests a stagnation in oil supply growth for 2024 and potential production risks in 2025,” said Patricio Valdivieso, vice president and global lead of crude trading analysis at Rystad Energy. “Given these conditions and the disparity between OPEC+’s demand outlook and other agencies, it is challenging to be fully bearish when global oil supply growth appears severely constrained.”
Additionally, recent improvements in complex refining margins, particularly in Europe and Asia, have supported the market. Neil Crosby, an analyst at Sparta Commodities, noted that refining margins at a typical complex refinery in Singapore averaged $3.60 a barrel for June, up from $2.66 a barrel in May.
Related topics:
Brent Crude Oil Shows Strong Positive Movement
WTI Crude Oil Sees Gains but Faces Tight Trading Range
Crude Oil Prices Decline Amid Demand Cuts and Supply Glut Projections
