Peso up as oil prices stay near 2-week low on OPEC forecasts
THE PESO recovered against the dollar on Wednesday as global oil prices stayed near a two-week low after the Organization of the Petroleum Exporting Countries’ (OPEC) downward revision of its global demand growth forecasts.
The local unit closed at P58.735 per dollar on Wednesday, strengthening by 9.6 centavos from its P58.831 finish on Tuesday, Bankers Association of the Philippines data showed.
The peso opened Wednesday’s session stronger at P58.75 against the dollar. Its intraday best was at P58.66, while it dropped to as low as P58.777 versus the greenback during the session.
Dollars exchanged increased to $1.43 billion on Wednesday from $1.12 billion on Tuesday.
The peso was supported by lower global crude prices after the OPEC reduced its global oil demand growth estimates for 2024 and 2025, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The peso-dollar pair traded mostly sideways on Wednesday amid market caution ahead of the release of US consumer and producer inflation data, a trader said by phone.
For Thursday, the trader sees the peso moving between P58.45 and P58.85 per dollar, while Mr. Ricafort sees it ranging from P58.70 to P58.90.
Oil prices held near a two-week low on Tuesday after dropping about 5% over the past two sessions as investors absorbed OPEC’s latest downward revision for demand growth, a stronger US dollar and disappointment over China’s latest stimulus plan, Reuters reported.
Brent futures were up 24 cents or 0.3% to $72.07 a barrel by 1:22 p.m. EST (1822 GMT), while US West Texas Intermediate crude rose 29 cents or 0.4% to $68.33.
On Monday, both crude benchmarks settled at their lowest prices since Oct. 29.
OPEC cut its forecast for global oil demand growth in 2024 and also lowered its projection for next year, marking the producer group’s fourth consecutive downward revision.
The weaker outlook highlights the challenge facing OPEC+, a group that includes the OPEC and allies such as Russia. This month, the group postponed a plan to start raising output in December against a backdrop of falling prices.
OPEC said world oil demand would rise by 1.82 million barrels per day (bpd) in 2024, down from growth forecast of 1.93 million bpd last month.
The group also cut its 2025 global demand growth estimate to 1.54 million bpd from 1.64 million bpd.
OPEC remains at the top of industry estimates and has a long way to go to match the International Energy Agency’s far lower view.
OPEC’s forecast on robust growth in China is “at odds with other forecasters, who have considerably reduced their end-2024 estimates on China’s poor macroeconomic performance and disappointing fiscal stimulus,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
On Friday, Beijing unveiled a 10-trillion-yuan ($1.4-trillion) debt package to ease local government financing strains. Republican former President Donald J. Trump, who won the Nov. 5 US presidential election, has threatened more tariffs on Chinese goods.
But analysts said China’s plan fell short of the amount needed to boost economic growth.
Also weighing on oil prices, the US dollar rose to a four-month high versus a basket of currencies as investors kept piling into trades seen benefiting from Trump’s victory.
A stronger greenback makes oil more expensive in other countries, which can reduce demand. — A.M.C. Sy with Reuters
