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Oil prices experienced an increase on Thursday, driven by the International Energy Agency’s upward revision of its annual crude demand growth projection. Furthermore, a significant decline in U.S. gasoline inventories indicated a tightening of fuel supplies.
As of 10:25 ET (14.25 GMT), futures were trading 1.9% higher at $81.20 per barrel, while the contract had risen by 1.5% to $85.25 per barrel, reaching their highest levels since early November.
The IEA raised its 2024 world oil demand forecast by 1.3 million barrels per day, an increase of 110,000 barrels per day from the previous month. Additionally, it predicted a first-quarter global demand growth of 1.7 million barrels per day, attributing the rise to an improved U.S. outlook and increased bunkering demand for longer voyages.
In contrast, OPEC maintained its demand growth estimate at 2.25 million barrels per day, a figure significantly higher than that of the IEA.
U.S. inflation data for February, released recently, had minimal impact on crude prices. The unexpected drawdown in U.S. oil and gasoline inventories on Wednesday spurred a more than 3% increase in crude benchmarks, reflecting a resurgence in demand following a winter slump.
Official data revealed a 1.5 million barrel reduction in crude inventories for the week ending March 8, contrary to expectations of a 0.9 million barrel build. Furthermore, gasoline inventories saw a substantial 5.7 million barrel draw, surpassing the anticipated 1.9 million barrel decline.
These inventory trends indicated a tightening of U.S. oil supplies, despite record-high crude production levels and forecasts of further production increases this year.
Geopolitical factors also influenced oil prices, as Ukrainian drone attacks targeted a major Russian fuel refinery, causing disruptions in fuel output. Russia’s temporary ban on fuel exports and escalating tensions with Ukraine added to concerns about oil market stability, compounded by the ongoing Israel-Hamas conflict.
Despite significant price gains, crude oil prices remained within a trading range of $75 to $85 per barrel established in recent months. Lingering concerns about weak Chinese demand and the potential for prolonged high interest rates tempered further price increases.
