Price Performance Indicators

• In the week (11/9 - 15/9) ICDX crude oil prices increased 4.47 percent.  
• OPEC's monthly report on estimates of world oil demand increases in 2024.

***************************************************************

Market Review

ICDX oil contract prices closed higher at $91.22 per barrel for the week ended September 15 on expectations of an extension of global supply cuts amid rising demand.

The Organization of the Petroleum Exporting Countries (OPEC) released its monthly report on 12/9 saying oil markets will tighten further this year amid strong demand and lower production. This comes on top of deeper supply cuts announced by Saudi Arabia and Russia, the world's two largest Oil producers, for the rest of 2023. (OPEC) is sticking to its forecast of strong global oil demand growth in 2023 and 2024. Monthly reports OPEC estimates world oil demand will increase by 2.25 million barrels per day (bpd) in 2024, compared with growth of 2.44 million barrels per day in 2023. Both projections are unchanged from the previous month.

Keeping supplies tight, the International Energy Agency (IEA) said on 13/9, Saudi Arabia and Russia had extended production cuts of 1.3 million barrels per day (bpd) of crude oil until the fourth quarter of the year. This reinforces tightening global supply. On the other hand, easing concerns about China's deflationary pressure lifted WTI prices as China is the world's largest oil importer. China's Consumer Price Index (CPI) for August rose 0.1% YoY, from a 0.3% decline in the previous month, compared with expectations of a 0.2% rise. The monthly figure was 0.3% as expected.

Market View

Optimism for Demand Recovery in China

The National Bureau of Statistics (NBS) showed China's industrial output grew 4.5% in August, higher than expectations at 3.9%, and higher than July's growth of 3.7%. Retail sales also grew faster at 4.6% in August compared with a 2.5% increase in July, and a forecast increase of 3%. The release of China's latest economic data shows signs of stabilization with industrial output and retail sales growing faster than expectations while also indicating that the recent economic stimulus relief measures implemented by the Chinese government are slowly succeeding in stabilizing the stalled economic recovery.

The Fed's Monetary Policy

The US Federal Reserve kept interest rates unchanged at a range of 5.25% to 5.50% at its September meeting. However, it is tightening monetary policy with projections of further tightening of the Fed's interest rate policy at the end of this year. High interest rates increase borrowing costs which could possibly slow economic growth and reduce oil demand.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research