Oil market deficit will support Brent prices

25 March 2024 136
Oil market deficit will support Brent prices

Last week, the International Energy Agency's March oil market report was published.


Here are some key points recorded in this report:


"Global oil demand in the first quarter of 2024 is forecast to rise by a higher-than-expected 1.7 million barrels per day (bpd) on an improved outlook for the U.S. and increased bunkering.

Demand growth in 2024 has been revised upward by 110 000 bpd from last month's report. At the same time, the pace of growth slows from 2.3 million bpd in 2023 to 1.3 million bpd as demand growth returns to its historical trend.


Global oil production is forecast to fall by 870 000 bpd in the first quarter of 2024 compared to the fourth quarter of 2023 due to weather-related production shutdowns and new curbs from the OPEC+ bloc.


Some OPEC+ members announced that they would extend further voluntary cuts to support market stability.

Continued attacks on tankers in the Red Sea lengthened supply routes, while global onshore oil inventories fell for a seventh consecutive month to the lowest level since at least 2016.


According to preliminary data, global onshore oil stocks fell another 38 million barrels last month, dropping to 180 million barrels from July.

The annual oil balance forecast is shifting from a surplus to a small deficit, but oil tanks might get a fill-up when the huge volumes of oil on the water reach their final destination."


On the basis of such data, it is possible to forecast a short-term increase in oil prices, including Brent.


From a technical point of view, Brent crude is in an ascending channel and is aiming for $88.0 per barrel.


The final recommendation is to buy Brent. The target is the level of $88.0. A possible loss should be set at $79.0 per barrel.

This content is for informational purposes only and is not intended to be investing advice.

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