Oil perks up on inventory drawdown forecasts for this year
Oil prices ticked higher on Wednesday after three key forecasters predicted that global oil inventories would fall in the second half of 2024, boosting prices.
Brent crude futures were up 76 cents, or 0.9 per cent, to $82.68 a barrel at 1005 GMT, while U.S. West Texas Intermediate (WTI) crude futures were up 86 cents, or 1.1 per cent, to $78.76.
Both contracts rose by $1 or more earlier in the session.
The International Energy Agency (IEA), the U.S. Energy Information Administration (EIA), and producer group the Organization of the Petroleum Exporting Countries (OPEC) have updated their views on the global oil demand-supply balance for 2024.
Their reports imply limited downside for prices in the second half of the year because all three predict declines in global oil inventories, Tamas Varga of oil broker PVM told Reuters.
Those views were reinforced by industry data on Tuesday showing U.S. crude oil inventories fell more than expected last week.
On Wednesday, although the IEA trimmed its 2024 oil demand growth forecast to just under 1 million barrels per day (bpd), citing sluggish consumption in developed countries, the numbers suggest it agrees with OPEC and the EIA that there will be stock draws in the second half of the year, PVM’s Varga said.
The IEA also predicted oil demand growth would plateau at 105.6 million bpd by 2029, and be well eclipsed by supply – a full 8 million bpd above projected demand – by 2030.
The IEA’s view for next year, and up to the 2030s, is bleak, noted Varga.
“But if there are stocks draws for the second half of this year, then why would we expect a significant fall on prices in the anticipation that there will be a glut by 2030?”
On Tuesday, the EIA raised its 2024 world oil demand growth forecast to 1.10 million bpd, while OPEC stuck with its 2024 forecast of 2.25 million bpd.
Prices had eased more than 2 per cent last week after OPEC and its allies said they would phase out output cuts starting October.
Important data is expected on Wednesday.
Inventory data from the EIA, the U.S. government’s statistics arm, is due at 10:30 a.m. EDT (1430 GMT).
Further hints on interest rate policy will come from the U.S. Consumer Price Index report before the bell, and the U.S. central bank’s policy announcement is due later in the day.