Oil edged further above $80/bbl on Oct. 12 as a rally in equities lent support, though prices pared most of their gain after a closely watched forecaster deemed supply adequate and the outlook for demand weakening.
Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.S. inventories and fading concerns for now that looming U.S. sanctions on Iran will cut supplies significantly.
Oil found support on Oct. 12 from a gain in world stocks. A drop in equities amid wider risk-off investor sentiment had pressured crude on Oct. 11.
“A rebound in equity markets would help Brent to rebound from $80,” said Olivier Jakob, analyst at Petromatrix, adding that a dip below $80 on Oct. 11 did not clearly break that level as a source of technical support.
International benchmark Brent crude rose 34 cents to $80.60/bbl by 5:52 a.m. CT, having dropped by 3.4% on Oct. 11. U.S. crude added 45 cents to $71.42.
Still, the monthly report by the International Energy Agency (IEA) on Oct. 12 weighed. The IEA said the market looked “adequately supplied for now” and trimmed its forecasts for world oil demand growth this year and next.
“This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data,” said the IEA, which advises industrialized countries on energy policy.
The IEA report is the latest government assessment to predict weaker demand ahead and conclude that supply is adequate. OPEC made a similar move on Oct. 11.
“The bearish alarm bells are ringing for next year's oil balance as market players brace for the return of a supply surplus,” said Stephen Brennock of oil broker PVM.
A drop in U.S. oil production also lent prices some support. In the U.S. Gulf of Mexico, companies cut output by 40% on Oct. 11 because of Hurricane Michael, even as some operators began returning crews to offshore platforms.
Michael made landfall in Florida on Oct. 10 as the third most powerful hurricane to strike the U.S. mainland, though it has since weakened to a tropical storm.
Recommended Reading
Oceaneering Won $200MM in Manufactured Products Contracts in Q4 2023
2024-02-05 - The revenues from Oceaneering International’s manufactured products contracts range in value from less than $10 million to greater than $100 million.
E&P Highlights: Feb. 5, 2024
2024-02-05 - Here’s a roundup of the latest E&P headlines, including an update on Enauta’s Atlanta Phase 1 project.
CNOOC’s Suizhong 36-1/Luda 5-2 Starts Production Offshore China
2024-02-05 - CNOOC plans 118 development wells in the shallow water project in the Bohai Sea — the largest secondary development and adjustment project offshore China.
TotalEnergies Starts Production at Akpo West Offshore Nigeria
2024-02-07 - Subsea tieback expected to add 14,000 bbl/d of condensate by mid-year, and up to 4 MMcm/d of gas by 2028.
US Drillers Add Oil, Gas Rigs for Third Time in Four Weeks
2024-02-09 - Despite this week's rig increase, Baker Hughes said the total count was still down 138 rigs, or 18%, below this time last year.