Oil climbs slightly as oil demand is expected to hit a record high next year

  • Global fuel demand will hit a record 102.2 million bpd in 2024 – EIA
  • Fed governor says central bank will have to raise rates further
  • Dollar nears seven-month low
  • Crude inventories rose 14.9 million barrels last week – API

HOUSTON, Jan 10 (Reuters) – Oil prices edged higher on Tuesday as the U.S. government forecast record global oil consumption next year and the dollar hovered at a seven-month low.

Global consumption of liquid fuels is expected to reach 102.2 million barrels per day in 2024, driven primarily by growth in countries such as India and China, reflecting trends in economic activity, US Energy said. Information Administration in its short-term energy outlook.

Brent crude futures rose 45 cents, or 0.6%, to settle at $80.10 a barrel, while U.S. crude ended 49 cents, 0.6% higher at 75 $.12 a barrel.

Markets were also awaiting clarification on the U.S. Federal Reserve’s plans to raise interest rates after Fed Chairman Jerome Powell avoided comments on monetary policy and the economy at a symposium. Traders are now looking to Thursday’s US CPI data for guidance on the near-term outlook.

Thursday’s data “could easily clarify the direction of the financial and oil markets for the coming weeks,” said Tamas Varga of oil broker PVM.

He said the dollar would fall if inflation came in below expectations or fell below November’s reading, Varga added.

The dollar hovered around its weakest level in seven months. A weaker dollar can boost demand for oil, as commodities denominated in dollars become cheaper for holders of other currencies.

Fed Governor Michelle Bowman said the US central bank will have to raise interest rates further to combat high inflation, which will likely lead to a slowdown in the labor market.

WTI and Brent rose 1% on Monday after China, the world’s largest oil importer and second-largest consumer, opened its borders over the weekend for the first time in three years.

China also issued a second batch of rough import quotas for 2023, increasing the total for this year by 20% from last year.

“Crude is trying to consolidate a bottom as China lifted most restrictions on international travel and trade,” said Dennis Kissler, senior vice president of trading at BOK Financial.

But analysts said a recovery in Chinese demand could only provide limited support for oil prices under downward pressure from the global economy.

“Given the recovery in consumption is still at the expected stage, the price of oil will most likely remain low and restrained,” analysts at Haitong Futures said.

Barclays Bank highlighted a drop of $15-25 a barrel from its forecast of $98 a barrel of Brent for 2023 if a “slump in global manufacturing activity worsens like the 2009-09 episode “.

Goldman Sachs expects the growing ability of the Organization of the Petroleum Exporting Countries (OPEC) to raise prices without hurting demand too much will limit downside risks to its bullish 2023 oil forecast.

Separately, crude inventories rose about 14.9 million barrels in the week ended Jan. 6, according to market sources citing figures from the American Petroleum Institute on Tuesday. It was expected to fall by 2.24 million. Data from the EIA is expected on Wednesday.

Reporting by Rowena Edwards in London, additional reporting by Arathy Somasekhar in Houston and Muyu Xu in Singapore; Editing by Marguerita Choy, David Gregorio and Deepa Babington

Our standards: The Thomson Reuters Trust Principles.

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