Oil prices continue to rise

Last week, oil prices surged by 3% as fears of a US recession eased and supply concerns from the Middle East provided a safety net. This morning, the rally showed no signs of abating, fueled by reassuring US data from last week that eased recession fears. However, with a series of important US data releases scheduled for this week, market sentiment could change as each new update affects recession expectations.

OPEC's announcement of a reduced global demand

Earlier on Monday, OPEC released its revised global oil demand growth forecast for 2024 to 1.78 million barrels per day, down from 1.85 million bpd projected previously. OPEC now expects global oil demand growth for this year to average 104.32 million bpd. For 2025, OPEC has also lowered its projections to 2.11 million bpd, down from 2.25 million bpd in its previous report.

In a surprising development, OPEC announced today that it has revised its global demand forecast for 2024 and 2025 downward. The main factor behind this adjustment is reduced expectations from China, whose recent economic data has been underwhelming. This marks the first reduction in OPEC's forecasts since July 2023. Recent Chinese data indicates a drop in diesel consumption and ongoing difficulties in the property sector.

Heading into a fourth consecutive day of gains, oil prices continued their upward trend on Monday. The U.S. crude benchmark rose by more than 2%, buoyed by the ongoing escalation of conflict in the Middle East, despite OPEC's earlier announcement of a reduced global demand growth forecast.

By 11:57 a.m. ET on Monday, WTI crude was up 2.26% at $78.58 per barrel, while Brent crude had gained 1.81%, trading at $81.10 per barrel. The rise in oil prices is also supported by recent U.S. economic data, which has alleviated some recession fears.

The move follows fears of a broader regional conflict after the recent assassination of senior Hezbollah and Hamas leaders. This action underscores the US's commitment to defending Israel against potential Iranian attacks, with Secretary Austin pledging that the US would "take every possible step" to support its ally.

Iran is being closely monitored for any signs of retaliation following the assassination of Hamas's top political leader, Ismail Haniyeh, in Tehran on July 31. Iran has accused Israel of the assassination and has vowed to retaliate, although Israel has not confirmed involvement but is widely suspected to be behind it.

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