Oil Prices Rise as Energy Agency Upgrade Demand Forecast

Oil Prices Rise as Energy Agency Upgrade Demand Forecast

Oil prices rise by about one per cent on Thursday after the International Energy Agency said that record natural gas prices would boost demand for oil. Oil rallies as the U.S crude oil stocks, including those in the Strategic Petroleum Reserve, rose by 5.3 million barrels in the week ended Oct. 8 following an increase of 1.4 million barrels in the previous week

Meanwhile, the price of the OPEC basket of thirteen crudes stood at $81.79 a barrel on Wednesday, compared with $82.37 the previous day, according to OPEC Secretariat calculations. The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea) and Rabi Light (Gabon).

Others are Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

Today, Brent crude gained 89 cents, or 1.1%, to $84.07 a barrel after falling 0.3% on Wednesday. U.S. West Texas Intermediate (WTI) crude climbed 87 cents, or 1.1%, to $81.31, more than recouping the previous day’s 0.3% decline.

Oil demand is set to jump by half a million barrels per day (bpd) as the power sector and heavy industries switch from other more expensive sources of energy, the IEA said, warning that the energy crunch could stoke inflation and slow the world’s economic recovery from the COVID-19 pandemic.

In its monthly report, the IEA increased its global oil demand growth forecast by 170,000 bpd to 5.5 million bpd for 2021 and by 210,000 bpd to 3.3 million bpd for 2022. The agency now expects total oil demand in 2022 to reach 99.6 million bpd, slightly above pre-pandemic levels.

Meanwhile, Saudi Arabia dismissed calls for additional OPEC+ production increases, saying its efforts with allies are sufficient and serving to protect the oil market from the wild price swings seen in natural gas and coal markets.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, have done a “remarkable” job acting as the so-called regulator of the oil market, Saudi Arabia’s energy minister Prince Abdulaziz bin Salman told a forum in Moscow on Thursday.

At its meeting earlier this month, OPEC+ stuck to its previous agreement to increase output by 400,000 bpd a month as it unwinds production cuts.

A larger than expected fall in U.S. fuel stocks also boosted prices on Thursday. Recall, the American Petroleum Institute (API) said on Wednesday that U.S. crude stockpiles rose by 5.2 million barrels for the week ended October 8.

Gasoline inventories fell by 4.6 million barrels and distillate stocks declined by 2.7 million barrels, according to API data. The U.S. Energy Information Administration (EIA) is due to release its inventory report on Thursday.

Oil prices were also supported by concerns over supply tightness after the EIA said on Wednesday that 2021 crude oil output in the United States, the world’s biggest producer, is now expected to decline more than previously forecast, though it will bounce back in 2022.

U.S Total Crude Oil Stocks Surge

U.S crude oil stocks, including those in the Strategic Petroleum Reserve, rose by 5.3 million barrels in the week ended Oct. 8 following an increase of 1.4 million barrels in the previous week.

Excluding inventories in the SPR, commercial crude oil stocks increased by 6.1 million barrels after a 2.3 million barrel increase in the previous week, a much larger gain than the 1.1 million barrel increase expected in a survey compiled by Bloomberg.

Stocks in the SPR fell by 800,000 in the week after falling by 900,000 barrels in each of the last two weeks.

Overall crude oil stocks were up 0.5% from the previous week but were still down 7.6% from a year earlier. Crude oil inventories are about 6% below the five-year average for this time of the year.

Gasoline stocks fell by 2 million barrels compared with a 1 million barrel increase expected. Gasoline stocks were down 0.9% from both the previous week and the same week a year earlier.

Distillate stocks were unchanged in the current week, compared with an expected decrease of 1 million barrels. Distillate stocks were 21.4% lower than in the same week a year ago.

Refineries operated at 86.7% of their capacity, down from 89.6% in the previous week. # Oil Prices Rise as Energy Agency Upgrade Demand Forecast.

Read Also: OPEC Forecasts 6% Jump in Global Oil Demand for 2021