Mounting oil demand behind rise in crude prices: Kuwaiti experts

KUWAIT: Two Kuwaiti oil analysts said that the rise in crude oil prices in last week’s trading, which reached their highest level since last April, was driven by an improved outlook for global oil demand and additional stimulus measures for the Chinese economy. The analysts said in separate statements to the Kuwaiti news agency (KUNA) on Sunday that oil prices rose for the fifth week in a row in the futures markets by about 8.4 percent for Brent crude and 6.4 percent for West Texas U.S. crude, the longest weekly gain series for more than a year.

Professor of Petroleum Engineering at the Public Authority for Applied Education and Training (PAAET) Dr Ahmad Al-Kouh explained that the global economy is still “relatively weak, ” citing the interest rate hike decisions taken by the US Federal Reserve (central bank) and other central banks in an attempt to support the global economy. Kouh said that he expects a decrease in global oil consumption in the second half of this year, stressing the need for OPEC + to remain vigilant and continuously follow up on the accelerated developments witnessed by the global oil markets.

Jamal Al-Gharabally

He ruled out any future production cuts by OPEC + countries, noting that the recent voluntary cuts announced by the bloc were the “right decision” and served their purpose by maintaining price levels above the $70 threshold. Another contributing factor to low prices, he said, is that the number of oil rigs operating in the US fell to its lowest level since March 2022 at 529 rigs “in an indication of the possibility of a decline in future production there”.

Energy expert Jamal Al-Gharabally predicted that oil prices will maintain their gains achieved over the past weeks due to the cohesion of OPEC + led by Saudi Arabia and Russia, in addition to Saudi Arabia announcing a new voluntary reduction by one million barrels per day and Russia’s confirmation to maintain the current low production rates over the next year.

The rise in oil demand in China has also helped oil prices stay at relatively high levels, Gharabally said, and the decline in global oil inventories, especially in the United States, indicating that forecasts suggest that price levels will remain in the range of $85 to $90 until the end of 2023. He said that there is a noticeable improvement in global oil demand because the US economy growth was greater than expected during the second quarter of the year. It can also be attributed to growing hopes that major central banks are nearing the end of their interest rate hike policies. – KUNA

The post Mounting oil demand behind rise in crude prices: Kuwaiti experts appeared first on Kuwait Times.

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