The Oil Market Isn't Buying The Bullish Demand Forecasts

Oil market participants focused on rising U.S. crude oil inventories, record American oil production, weaker Chinese refinery and economic data, and the first drop in U.S. retail sales in seven months, as negative sentiment persisted and dragged down oil prices to a four-month low. OPEC dismissed the negative market sentiment as overblown and said that the oil market fundamentals remain strong, with Chinese crude imports set to increase to a new annual record in 2023. A few days earlier, the energy minister of OPEC's top producer and the world's largest crude oil exporter, Saudi Arabia, said that oil demand continues to be robust and blamed speculators for the drop in oil prices. Due to an all-time high Chinese monthly demand and resilient consumption in the United States, the agency revised up its 2023 oil demand growth forecast to 2.4 million bpd, up from 2.3 million bpd growth expected in the October report. Data on actual crude oil imports in China and the rest of Asia so far this year have shown that demand may be weaker than the IEA's bullish forecasts, Reuters columnist Clyde Russell notes. Concerns about Chinese demand and the U.S. economy have been dragging oil prices down since October, following a jump in the late summer after Saudi Arabia began its voluntary cut. "There are clearly concerns around demand going into next year, particularly around China, which OPEC this week sought to relieve, to no avail," Craig Erlam, senior market analyst at OANDA, said on Thursday after oil prices dipped by 5% in one day.