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Highlights
- IEA projects record oil demand in 2023: 101.9 million bpd
- OPEC+ output cuts could harm global economic recovery and consumers
- 57% of demand increase due to jet fuel deman
Overview
U.S. West Texas Intermediate crude oil futures are edging higher on Friday after the International Energy Agency (IEA) said it expected global demand to rise to a record high this year on the back of a recovery in Chinese consumer. However, the IEA also warned that output cuts announced by OPEC+’s producers could exacerbate an oil supply deficit and hurt consumers.
At 12:00 GMT, June WTI crude oil futures are trading at $82.27, up $0.23 or +0.28%. On Thursday, the United States Oil Fund ETF (USO) settled at $71.80, down $0.63 or -0.87%.
With apprehensions over a banking crisis last month now subsiding and the recent unexpected announcement by OPEC+ to reduce output, the U.S. benchmark is poised to secure its fourth successive week of gains.
IEA Predicts Record Oil Demand in 2023, Warns of Supply Shortfall
The International Energy Agency (IEA) projected in its monthly report released on Friday that the world’s demand for oil will surge by 2 million barrels per day (bpd) in 2023, reaching an unprecedented 101.9 million bpd, primarily due to a rise in Chinese consumption following the relaxation of COVID-19 restrictions. The report stated that 57% of the 2023 increase will be due to jet fuel demand.
However, on Thursday, OPEC highlighted the possible downside risks to summer oil demand, which factored into its decision to further reduce output by 1.16 million bpd.
The IEA warned that this move by OPEC+ could harm both global economic recovery and consumers, particularly those facing increased prices for essential items.
The IEA also projected a 400,000 bpd decline in global oil supply by the end of the year, attributing it to an expected 1 million bpd boost in production from non-OPEC+ sources from March, compared to a 1.4 million bpd drop from the producer bloc.
Daily June WTI Crude Oil Technical Analysis
The main trend is up according to the daily swing chart. A trade through $83.38 will signal a resumption of the uptrend. A move through $64.58 will change the main trend to down. This is highly unlikely but due to the strong rally, the market is vulnerable to a potentially bearish closing price reversal top.
The minor trend is also up. A trade through $79.40 will change the minor trend to down. This will shift momentum to the downside.
The minor support is a pivot at $81.39. The next major upside target is the Nov. 7 main top at $86.40.
Daily June WTI Crude Oil Technical Forecast
Trader reaction to the minor pivot at $81.39 is likely to determine the direction of the June WTI crude oil futures contract on Friday.
Bullish Scenario
A sustained move over $81.39 will indicate the presence of buyers. Taking out $83.38 will indicate the buying is getting stronger with $86.40 the next major upside target.
Bearish Scenario
A sustained move under $81.39 will signal the presence of sellers. This could trigger a steep intraday plunge into $79.40, followed by $78.07 – $76.82.
For a look at all of today’s economic events, check out our economic calendar.This article was originally posted on FX Empire
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