Oil prices rise as revised IEA outlook suggests tighter market
A model of petrol pump and a rising stock graph are seen in this illustration taken January 15, 2024. REUTERS/Dado Ruvic/Illustration/file photo
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By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices rose on Thursday as the International Energy Agency’s predicted a tighter market in 2024 and raised its view on oil demand growth this year.
Brent crude oil futures for May rose $1.21, or 1.4%, to $85.26 a barrel by 11:57 a.m. ET (15:57 GMT), after touching an intra-day high of $85.53, its highest since early November.
U.S. West Texas Intermediate (WTI) crude for April was up $1.41, or 1.8%, at $81.13.
Brent had settled above $84 a barrel for the first time since November on Wednesday, with both benchmarks chalking up gains close to 3%.
“The market may have been poised for some follow-through buying after Ukrainian drone strikes damaged three Russian oil refineries and U.S. inventories fell last week, but the market got a further lift from Thursday’s International Energy Agency monthly Oil Market Report,” said Tim Evans, an independent oil market analyst.
The IEA raised its view on 2024 oil demand growth for a fourth time since November as Houthi attacks disrupt Red Sea shipping, but warned that “the global economic slowdown acts as an additional headwind to oil use”.
The energy watchdog forecast demand will rise by 1.3 million barrels per day in 2024, up 110,000 bpd from last month, but still lower than growth of 2.3 million bpd last year.
The IEA also cut its 2024 supply forecast and now expects oil supply to rise by 800,000 bpd to 102.9 million bpd this year.
Russia’s energy ministry said it expects a rise in crude exports because of refinery outages.
Ukrainian drone strikes on Russian refining facilities continued for a second day on Wednesday, targeting four large oil refineries.
Russia’s seaborne fuel exports fell 1.5% from the previous month in February because of refinery downtime stemming from Ukrainian drone attacks and fires.
The damage to refineries could cut Russian gasoline production by more than 10%, said Dennis Kissler, senior vice president of trading at BOK Financial, adding that many traders feel tighter fuel supplies are here to stay in the near term.
Meanwhile in the U.S., crude and gasoline inventories plunged last week, government data showed on Wednesday, with sharply higher pump prices expected in the coming weeks as major refinery outages have cut supplies ahead of the summer driving season.
U.S. producer prices rose 0.6% in February, partly because gasoline prices increased by more than forecasts for a 0.3% advance.
Traders now see a 63.5% chance of the Federal Reserve cutting rates in June, according to the CME FedWatch tool, down from 67% prior to the data. Lower interest rates cut consumer borrowing costs, which can boost economic growth and demand for oil.
