Global Oil Demand May Be Weakening
January 8, 2024
Energy prices closed higher on Friday driven mainly by the ongoing concerns the market is familiar with; a better-than-expected jobs report of Friday, ships avoiding the Red Sea due to increasing attacks by Iran-backed Houthi rebels in Yemen, Libya shutting down their largest oil field, OPEC+ oil output cuts starting.
JP Morgan said early data indicates global oil consumption in December grew at the slowest pace in nine months. However, it said despite undershooting expectations in the last month of 2023, global oil demand was in line with yearly expectations. While demand in December possibly grew 1.3 million bpd year on year, demand for all of 2023 was estimated to have increased 1.8 million bpd.
Baker Hughes reported the oil rigs were up 1 to a total of 501 and last year at this time there were 618 oil rigs.
Crude oil prices are selling off this morning as Saudi Arabia cut their prices to Asia more than expected, giving the indication that there is weaker global demand outlook. This news started the selling, but it appears more are jumping on board and the market may be seeing some fund selling.
Refinery and trade sources said China’s oil trade with Iran has stalled as Tehran withholds shipments and demands higher prices from its top client.