Oil prices were expected to rise about 4% in the week after the International Energy Agency became the latest forecaster to suggest oil demand this year could be stronger than previously expected.
IEA Said On Thursday, it expected oil demand to rise by 1.3 million barrels per day this year, up from 1.2 million barrels per day last month. The agency noted that disruptions to maritime transport due to Houthi attacks in the Red Sea were increasing fuel demand.
The IEA also revised its supply forecast downward. It is expected to add 800,000 barrels per day of additional supply this year. As a result, the oil market went from being in surplus last month to now facing a deficit in the second half of this year.
However, the agency noted that lukewarm economic growth would continue to be a headwind for prices, even if other institutions such as the IMF revised upward their global GDP growth forecasts.
A series of new drone attacks by Ukraine on Russian refineries also contributed to this week’s price rise, especially after the Energy Department said the attacks led to a 1.5% decline in fuel exports in February. There was also a drone attack on an oil refinery in Russia last month.
The latest weekly inventory data for the US is also bullish on prices, featuring a significant decline in fuel inventories suggesting strength in demand.
“Demand remains high, but supplies are tight, especially on the fuel side. Refining margins are also very strong, which is positive for crude oil demand,” Reuters said. Quote Dennis Kistler, senior vice president of trading at BOK Financial.
As a result of the price of Brent crude oil rising above $85 a barrel on Thursday, traders began taking profits and the price eventually fell. Still, international benchmarks were trading above $85 per barrel in Asian trading this morning.
West Texas Intermediate crossed the $80 threshold earlier this week and was trading above $81 a barrel in morning Asian trading.
Written by Irina Slav for Oilprice.com
