Sign In with Google
Sign In with Facebook
Oil Prices Gain Momentum as Demand Rises
The price of oil achieved five-month peaks on Thursday, propelled by the International Energy Agency's (IEA) amended growth forecast for crude demand which injected renewed confidence in the face of potential supply excess.
U.S. crude futures registered their highest level since November 6, closing at $81.26 a barrel, a rise of 1.9%. Brent crude matched this upward trajectory, increasing by 1.7% to settle at $85.42 a barrel by 18:30 GMT.
IEA Adjusts Oil Demand Forecast for 2024
The IEA has revised upward its assessment of global oil demand in 2024. The agency now predicts an increase of 1.3 million barrels per day, representing an uptick of 110,000 barrels daily compared to last month's forecast.
In an additional positive development, the IEA expects global demand growth in the first quarter to jump to 1.7 million barrels per day, surpassing previous projections, thanks to an encouraging economic outlook in the U.S. and robust bunkering demand due to extended shipping voyages avoiding the Red Sea.
Forecast and Market Dynamics Boost Oil Demand
Notwithstanding buoyant demand predictions, ANZ Research observed that "rising margins will incentivize refineries to enhance oil processing, further fuelling oil demand", following data showing escalating U.S. refinery activity.
The benchmarks for crude experienced a surge of over 3% on Wednesday, spurred by an unforeseen decline in U.S. oil and gasoline stocks. This shift implies that demand is rebounding from its seasonal winter dip, especially as more refineries restart operations following winter shutdowns.
Swipe in US Inventory and Russian Refinery Attacks
Pertinent data revealed that crude inventories contracted by around 1.5 million barrels in the week ending March 8, defying expectations of a 0.9 million barrel increase. What took market observers by surprise was a 5.7 million barrel decrease in gasoline stocks, marking the fifth consecutive week of significant draws and surpassing the predicted 1.9 million barrel draw.
These figures indicate that oil supplies in the U.S are tightening, despite record production levels and anticipation of production growth.
Continuing geopolitical tensions and events such as the drone attacks on a key Russian refinery by Ukraine have also bolstered oil prices. This incident disrupted the refinery's operation and is likely to constrict Russia’s fuel capacity, coming against a backdrop of already constricted gasoline markets in that country.
However, positive trends notwithstanding, crude prices continued to bob within the $75 to $85 per barrel range – with fears over sluggish Chinese demand and enduring high interest rates tempering further gains.
