Oil prices rose on Friday, supported by expectations of more OPEC production cuts despite the International Energy Agency (IEA) reporting demand growth at its lowest since the financial crisis of 2008.
Brent crude futures were up $1.08 at $58.46 a barrel by 1319 GMT. West Texas Intermediate (WTI) futures were up $1.35 at $53.89.
“Despite a further cut in oil demand growth by the IEA, oil prices are trading marginally higher, as the demand growth cut was already announced previously by the head of the IEA and the agency still expects larger inventory draws for 2H19,” said UBS analyst Giovanni Staunovo.
The IEA said that global oil demand in the first half of 2019 grew at its slowest since 2008, hurt by mounting signs of an economic slowdown and a ramping up of the US-China trade war.
Oil prices have lost more than 20% from peaks reached in April, putting them in bear territory.
Rystad Energy said the oil market was going “from gloomy to gloomier,” calling into question the consultancy’s own bullish view for the first part of 2020.
“Economic recession risk and further escalation of the US-China trade war are key concerns in the near term. How long OPEC+ is willing to continue to manage production adds uncertainty,” said Bjornar Tonhaugen, head of oil market analysis at Rystad Energy.
The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, agreed in July to extend their supply cuts until March 2020 to boost oil prices.
Russia’s energy ministry said IEA’s estimates were largely in line with its own forecasts and that Moscow had taken into account the possibility of a slowdown in oil demand when it extended an output reduction deal with OPEC.
“Market focus in oil has clearly shifted. It is squarely on future demand rather than on supply,” said Harry Tchilinguirian, global oil strategist at BNP Paribas in London.
Saudi Arabia, de facto leader of OPEC, plans to maintain its crude oil exports below 7 million barrels per day (bpd) in August and September to bring the market back to balance and help to absorb global oil inventories, a Saudi oil official said on Wednesday.
The United Arab Emirates will also continue to support actions to balance the oil market, energy minister Suhail al-Mazrouei said in a tweet on Thursday.
Oil rises despite demand growth at decade low