Oil prices rise on strong IEA and OPEC demand estimates

FA 3D printed oil pump jack is seen in front of the OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic/Illustration/File photo

LONDON  -Oil prices rose on Thursday as the IEA joined producer group OPEC in forecasting relatively strong growth in global oil demand this year, with price impetus also coming from disruption to U.S. output and geopolitical risks in the Middle East.

Brent crude futures gained 37 cents, or 0.5 percent, to $78.25 a barrel by 1005 GMT while U.S. West Texas Intermediate crude futures rose 55 cents, or 0.8 percent, to $73.11.

The International Energy Agency (IEA) now expects oil demand to grow by 1.24 million barrels per day (bpd) in 2024, up 180,000 bpd from its previous projection, its monthly report said. The agency cited improved economic growth and lower crude prices in the fourth quarter.

READ: IEA lowers 2024 oil demand growth forecast

The Organization of the Petroleum Producing Countries (OPEC) had said on Wednesday that it expected demand growth of 2.25 million bpd this year, unchanged from its forecast in December. The producer group also said oil demand is expected to rise by a robust 1.85 million bpd in 2025 to 106.21 million bpd.

The IEA’s executive director, Fatih Birol, told the Reuters Global Markets Forum on Wednesday that he expects oil markets to be in a “comfortable and balanced position” this year despite Middle East tensions, rising supply and a slowing demand growth outlook.

Oil’s range-bound trading in recent days reinforces the narrative that investors are shrugging off concern that tankers may be at risk from attacks in the Red Sea, said Ehsan Khoman, analyst at bank MUFG.

Attacks by Yemen-based Houthi militants against ships in the Red Sea have forced many companies to divert cargoes around Africa, adding to journey times and costs. The U.S. on Wednesday conducted another round of strikes against Houthi targets in Yemen in retaliation for the attacks on shipping.

READ:  How could Red Sea attacks affect oil and gas shipping?

The Iran-aligned Houthis say they are acting in solidarity with Palestinians during Israel’s war with Gaza.

In the latest sign of escalating geopolitical tensions, Pakistan conducted strikes inside Iran, targeting Baluchi separatist militants, the country’s foreign ministry said, two days after Iranian strikes inside Pakistani territory.

In top oil-producing U.S. state North Dakota, meanwhile, oil output fell by 650,000 to 700,000 bpd because of extreme cold weather, the state said.

U.S. government data on oil inventories is due at 11 a.m. ET (1600 GMT) on Thursday. Domestic crude stockpiles rose last week by 480,000 barrels, according to market sources citing American Petroleum Institute figures.