Mar 14 2024 Oil prices witnessed further gains on Thursday as investors absorbed the International Energy Agency’s (IEA) latest oil market report, which revised upward its demand growth forecasts and lowered projections for non-OPEC supply in 2024.
Brent crude futures for May climbed by 72 cents, or 0.86%, reaching $84.75 a barrel by 1021 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude for April surged by 83 cents, or 1.04%, reaching $80.55.
The IEA raised its first-quarter global demand growth forecast by 1.7 million barrels per day (bpd), driven by an improved U.S. outlook and increased bunkering demand due to longer voyages to avoid the Red Sea.
Additionally, the agency increased its 2024 demand growth projection by 110,000 bpd but cautioned that “the global economic slowdown acts as an additional headwind to oil use,” expecting overall demand growth to slow to 1.3 million bpd this year after a growth of 2.3 million bpd last year.
PVM analyst Tamas Varga remarked, “Whilst the IEA’s view on global oil balance is still more than a country mile away from OPEC’s prognosis, this report does nothing to dent the developing upbeat mood.”
Moreover, the IEA revised its 2024 supply forecast downwards, considering the latest cuts from the OPEC+ coalition and reduced output from non-OPEC nations. It anticipates oil supply to increase by 800,000 bpd to 102.9 million bpd this year.
UBS analyst Giovanni Staunovo commented, “Quite a bullish report, with upward revisions on demand growth, and lower supply growth estimates.”
Oil prices closed above $84 a barrel for the first time since November on Wednesday, following close to 3% daily gains on an elevated U.S. demand outlook and heightened geopolitical risk.
Supporting the demand side, U.S. gasoline inventories dropped for the sixth consecutive week, declining by 5.7 million barrels to 234.1 million barrels, triple the expectations for a draw of 1.9 million barrels, according to the Energy Information Administration (EIA).
Unexpectedly, U.S. crude oil stockpiles also decreased as processing increased.
On the supply front, Ukrainian drone strikes on Russian refining facilities continued for a second consecutive day on Wednesday.