Morgan Stanley latest to cut oil demand growth forecast on China factors (NYSEARCA:USO)

Crude oil futures settled higher on Friday but fell for the week as the market digested bullish U.S. inventory data and Federal Reserve Chairman Jerome Powell delivered his speech. Strongest signal yet The central bank will cut interest rates next month.

Earlier this week, oil futures hit their lowest levels since early January after the U.S. government sharply cut its estimate of jobs added by employers this year through March, raising concerns of a possible recession, which outweighed support from a big drawdown in U.S. crude inventories.

But with upside risks to inflation receding and downside risks to employment increasing, Powell said at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming, on Friday: “It’s time to adjust policy.”

For crude oil, “the real question will be the pace and size of further cuts in the following months, (which) should have a significant impact on dollar-denominated commodity prices like crude oil, as interest rates are lowered.” Usually supportive of nominal prices.Robbie Fraser, CEO of Schneider Electric, told Dow Jones:

Crude oil’s gains on Friday failed to avoid a weekly loss, as Nymex crude (CL1:COM) for October delivery ended flat in early trading. +2.5% To $74.83 a barrel, Brent crude for October (CO1:COM) was flat. +2.3% to $79.02 a barrel, but benchmarks fell 0.9% and 0.8% on the week, respectively.

U.S. natural gas futures fell for a fourth straight session on oversupply concerns but managed to hold above the $2 level, with New York gas futures (NG1:COM) for September delivery ending the trading session at $1.35. -1.5% The price of a barrel of US crude oil fell to $2.022/million British thermal units on Friday, down 4.7% during the week.

Exchange-traded funds:NYSEARCA: Use), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (USOI), (UNG), (BOIL), (KOLD), (UNL), (FCG)

Morgan Stanley analysts were the latest to point to weakness in China in They lowered their forecast for global oil demand growth. By 2024, demand for electric vehicles in China is expected to decline significantly, mainly due to slowing economic growth in China and increasing use of electric vehicles in the country.

The bank now expects global oil demand to rise this year to 1.1 million barrels per day, compared to its previous forecast of 1.2 million barrels per day, and has modestly cut its forecast for Brent crude to an average of $80 per barrel in the fourth quarter of 2024, compared to $85 per barrel previously.

Analysts at Morgan Stanley said that the replacement of gasoline by electric cars in China has reduced the country’s oil demand growth by 100,000 barrels per day, and the increase in the number of trucks in China running on liquefied natural gas has reduced oil demand growth by 100,000 to 150,000 barrels per day.

energy (New York: Canada: XLE), as represented by the Energy Sector Select SPDR Fund, ended the week -0.1%the only industry group among the 11 industry groups in the S&P 500 to end the year in the red.

Top 10 Energy & Natural Resources Gainers Over the Past 5 Days: Perma Pipe International Inc. (PPIH) +35%Piedmont Lithium (PLL) +23.7%EOSE Energy +22.3%ASP Analogues (ASPI) +21.8%Calumet Specialty Products (CLMT) +17.9%Nano Nuclear Energy (NNE) +17.2%Long (LGO) +16.9%Atlas Lithium (ATLX) +15.2%Caledonia Mining (CMCL) +14.4%.

Top 5 Declining Energy and Natural Resources Stocks Over the Past 5 Days: ZEO Energy (ZEO) -15.8%Tamboran Resources (TBN) -14.4%Gold Fields (GFI) -13.2%Hawaiian Electric Company (HE) -12.9%Gran Tierra Energy (GTE) -10.9%.

Source: Barchart.com