Crude oil trade remains volatile amid fears for the global economic growth and Donald Trump’s “State of the Union” address. Initially, the oil price rose during the Asian session but then changed its direction and prices went down against the backdrop of fears about the outlook for the global economy.
The futures on US crude oil WTI for delivery in March depreciated by 0.13% to 53.59 USD per barrel. The futures on Brent variety for delivery in April declined by 0.10% to 61.92 USD barrel.
Since the start of this year, crude oil prices have recovered about half of what they lost in the final three months of 2018 as the impact of OPEC-led production cuts have been somewhat offset by economic growth concerns.
Fears of global growth have been worsening the market sentiment in recent days, while global supply tightening remains.
Traders also focused on US President Donald Trump’s “State of the Union” address.
Important factors on commodity markets are the US sanctions against Venezuela, which are supporting the price of crude oil and help to tighten oil supply. Plenty of ships, loaded with Venezuelan oil, are stuck in the Gulf of Mexico and some of the tankers stored oil purchased before the latest US sanctions against Venezuela.
OPEC and its allies, including Russia, have agreed to cut production last month to shrink the volume of their supplies. Russia curbed output by 47,000 barrels per day last month from October levels, as it seeks to implement cuts pledged by top exporters to boost the market. Saudi Arabia was said to nudge up prices for its heavier grades as well.
Russian Energy Minister Alexander Novak said Russia is “fully complying with obligations” and will gradually cut output by May. That would put it behind an earlier promise to reach its pledged reduction in the first quarter. Saudi Arabia said last month that Russia’s curbs were moving slower than hoped for, although the kingdom said it expected compliance eventually.
However, crude oil reserves in the United States increased last week after refineries increased production, although gasoline and distillate stocks grew, according to the API. Crude oil stockpiles in the US rose by 2.5 million barrels last week to 448.2 million barrels. For comparison, analysts expected an increase of 2.2 million barrels.
The API also reported that gasoline stockpiles climbed by 1.7 million barrels, while distillate inventories edged up by 1.1 million barrels.
Bank of America: Oil demand will reach its peak by 2030
Global oil demand will reach its peak by 2030 and after that will start lowering, according to the Bank of America.
Over the next decade, the crude oil demand will continue to grow, albeit at a slower pace. According to Bank of America Merrill Lynch, the annual growth in global oil consumption will slow significantly in the next few years. By 2024, demand growth will be halved to 0.6 million barrels per day compared with a current 1.2 million barrel per day.
But by 2030, growth in demand will reach zero and consumption will reach its peak.
The main factor for the further decline in demand after the end of the next decade will be electric vehicles.
Bank of America points to several indicators that will play an important role in sustainable growth in demand for electric vehicles.