Oil rises as producers forecast demand growth, US fuel stockpiles drop

Miniatures of oil barrels and a rising stock graph are seen in this illustration taken January 15, 2024. REUTERS/Dado Ruvic/Illustration/File photo

SINGAPORE  – Oil prices rose on Wednesday, reversing earlier losses, as major producer group OPEC kept to their relatively strong forecast for demand growth this year and an industry report showed a sharp decline in U.S. fuel stockpiles amid a refinery outage.

Brent futures climbed 16 cents to $82.93 a barrel at 0808 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 11 cents to $77.98 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) said in their monthly report on Tuesday world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.

READ: OPEC sticks to oil demand view, sees better economic growth

The 2024 forecast is higher than that of other forecasters such as the International Energy Agency and banks such as Morgan Stanley.

The price structure of the Brent futures market is indicating signs of improving demand as the backwardation, when the price of oil for prompt delivery is higher than for later supply, has increased since the start of the month, according to analysts at ING in a client note. The premium of the April Brent future over the May future has risen to 77 cents a barrel on Wednesday from 26 cents on Feb. 5.

Tightness in crude market

“There appear to be some signs of tightness in the crude market and this is reflected in the prompt time spread,” the analysts said. “This tightness, along with the broader strength we are seeing in refinery margins, will provide some support to crude oil prices.”

U.S. gasoline and distillate fuel stockpiles plunged last week, according to market sources citing American Petroleum Institute (API) figures released late on Tuesday, most likely reflecting the shutdown of BP Plc’s Whiting, Indiana, oil refinery, the biggest in the U.S. Midwest.

READ: Oil rises $1 on US crude stock draw, China stimulus hopes

The API data showed gasoline inventories fell 7.23 million barrels and distillate stocks fell by 4.02 million barrels in the week ended Feb. 9, both much larger declines than analysts expected.

At the same time, U.S. crude oil inventories rose by a much larger than expected 8.52 million barrels.

BP’s 435,000-barrel-per-day Whiting refinery shut on Feb. 1 and The company is trying to restore the plant to full operations but is not sure when it will resume output.

Official inventory data from the U.S. Energy Information Administration is due later on Wednesday at 1530 GMT.