Oil Prices Ease On Higher Supply Forecast, Strong Dollar

On November 14, 2024, Brent oil futures expiring in January fell 0.3% to $72.23 a barrel while West Texas Intermediate crude futures fell 0.45% to $68.16 a barrel. Meanwhile, the U.S. Dollar index traded 0.21% higher at 106.70.

Key Reasons For Fall in Oil Prices

• US Energy Information Administration (EIA) Forecast

The US Energy Information Administration (EIA) has raised its forecast for US oil production, now estimating an output of 13.23 million barrels per day for the current year, surpassing last year’s record. This uptick feeds into the global estimate, raising next year’s expected production to 104.7 million barrels per day.

Market participants are now anticipating the release of the International Energy Agency’s (IEA) oil market report, scheduled for later today.

• OPEC Demand Growth Forecast

The Organisation of the Petroleum Exporting Countries (OPEC) revised its global oil demand growth forecast for 2024 to 1.82 million barrels per day (bpd), lowering it from the previous month’s projection of 1.93 million bpd amid sluggish demand in China, India, and other regions.

• Strong Dollar Index

The dollar index surged on November 13 after the U.S. inflation data for October revealed an increase that met market expectations, hinting that the Federal Reserve may continue reducing interest rates. The Bureau of Labor Statistics (BLS) announced that the Consumer Price Index (CPI) increased by 2.6% last month, in line with previous expectations.

Impact on Indian Oil Refiners

The recent fall in crude oil prices is likely to have a mixed impact on Indian oil refiners and importers, influencing their stock prices in different ways depending on their business models and market conditions.

Reliance Industries share price traded 0.28% higher at ₹1,255.55, while Hindustan Petroleum share price saw a rise of 1.52%, reaching ₹377.05. Meanwhile, Indian Oil Corporation share price was 0.25% lower at ₹135.65, and Bharat Petroleum share price traded down 1.67% at ₹300.75 at 11:00 AM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.