Kamco Invest pointed out that crude oil prices witnessed a partial recovery at the beginning of last week after 3 consecutive weeks of decline, noting that these gains came on the back of the oil markets reaching the oversold zone, which witnessed prices reaching levels of $70 per barrel.
Kamco Invest added in a report: “However, prices fell again in the last three trading sessions, driven by concerns about the momentum of demand this year, which led to a decline for the fourth week in a row,” noting that the temporary gains came after the inflation figures. However, the high unemployment rate in the United States on the one hand and low borrowing and steady inflation in China again called into question expected demand growth during the rest of the year.
The report indicated that the rise in prices during the first half of last April led to an increase in average prices last month, as the average price of the “OPEC” basket of oil reached its highest level recorded in 5 months at $84.2 per barrel, with a monthly growth of 7.3 percent, while the average price was Average spot prices for Brent crude grew higher by 8.2 percent, to reach an average of $84.8 per barrel, while the average price of Kuwaiti crude oil witnessed a similar growth, by 8.1 percent, to reach $85.7 per barrel.
The report indicated that oil prices were volatile during the current May, but they tended mostly towards a decline since the second half of last month.
He explained that in terms of expectations, the recent decline in oil prices led the US Energy Information Administration to reduce its forecast for the price of Brent crude by 7 percent for the year 2023 to $78.65 per barrel, compared to $85.01 per barrel, according to its previous expectations, and expectations for the year 2024 were reduced by 8.3 percent to $74.47 a barrel, compared to $81.21 a barrel, according to previous expectations. However, the broader consensus of Brent crude price expectations, according to Bloomberg, has not changed significantly compared to last month.
On the demand side, the report stated that prices received a strong boost after a report issued by Reuters, quoting the US Secretary of Energy, indicated that the US government had proposed buying oil to refill the strategic oil reserves later this year, and expectations of higher demand also contributed. The seasonal trend in the United States also boosted prices, while recent data from China reduced expectations for oil demand in the coming months, the most prominent of which was the uneven recovery, as the latest inflation report showed that the price increase in China on an annual basis It was close to zero (+0.1 percent) last April, as the data revealed that imports fell sharply in China while exports grew at a slower pace.
On the other hand, Kamco Invest stated that a report issued by OilChem stated that refineries in China plan to increase refinery operations to reach their highest production capacity recorded since the beginning of 2021.
OPEC production fell below 29 million barrels for the first time in 10 months
The “Kamco Invest” report stated that the latest oil production data issued by Bloomberg Agency showed that OPEC production declined for the second month in a row last April, as the organization’s production decreased to less than 29 million barrels per day for the first time in 10 months, to reach 28.8 million barrels. per day during April, mainly attributing this decrease to the sharp decline in production in Iraq, along with lower production in Nigeria and the UAE, while Saudi Arabia and Angola recorded marginal increases during the year.
The report noted that oil production in the United States remained stable at around 12.3 million barrels per day, reflecting a trend similar to the growth in the number of oil drilling rigs in the United States.