Ravindra Rao: Oil demand outlook remains bleak

Oil posted gains on Friday but continued to head toward its longest weekly losing streak since 2018 as investors remained skeptical that deeper supply cuts by OPEC+ would be effective.

Global benchmark Brent, trading above $75 a barrel, is still heading for a seventh weekly decline. US crude was near $70 a barrel after falling 11 percent over the last six sessions.

Crude oil has closed lower in every session since the meeting between the Organization of the Petroleum Exporting Countries and its allies last week, as the group's plans for deeper cuts were met with skepticism. This decline followed comments from leading producer Saudi Arabia that restrictions could be extended beyond the end of March, followed by similar statements from Russia, Algeria, and Kuwait.

There are also concerns regarding the trajectory of demand. According to a Bloomberg survey, Chinese consumption is expected to increase by 500,000 barrels per day next year; this figure is less than a third of the growth seen in 2023. Meanwhile, many economists in the US are forecasting a recession starting next year.

Ravindra Rao, Head of Commodity Research at Kotak Securities in Mumbai, said, "The oil demand outlook remains bleak. The recovery in China has failed to gain momentum, while factory activity in the West continues to contract."