Oil Prices Rise as IEA Forecasts 6% Increase in Global Demand

Oil Prices Rise as IEA Forecasts 6% Increase in Global Demand

Crude oil prices rise on Thursday as the United States International Energy Agency, IEA, forecast 6% increase in global demand. Also supporting the uptick in prices was significant drop in US crude inventories, raising hope for improve demand following oil cartels incremental output raise plan for May and June.

International benchmark Brent crude was trading at $66.63 per barrel earlier today, increased 0.07% after closing Wednesday at $66.58 a barrel.

American benchmark West Texas Intermediate (WTI) was at $63.16 per barrel at the same time for a 0.01% increase after it ended the previous session at $63.15 a barrel.

Brent printed at $66.90 due to improve demand outlook on account of declined inventories in the United States in particular.

IEA said in a report that US commercial crude oil inventories fell by 5.9 million barrels, or 1.2%, to 492.4 million barrels, relative to the market expectation of a fall of 2.1 million barrel.

Oil analysts said such a big drop in inventories exerted upward oil price pressure, signaling a crude demand rebound in the US, the world’s largest oil consumer.

Positive forecasts raise hopes of demand recovery

One day after the Organization of Petroleum Exporting Countries (OPEC) revised up its global oil demand forecast, the International Energy Agency (IEA) also made upward revisions to its oil demand forecasts for 2021 in its monthly oil report on Wednesday.

The agency forecast that global oil demand will increase by 5.7 million bpd, or 6.3%, to an average of 96.7 million bpd this year on the back of better economic forecasts and robust, prompt fiscal indicators.

Pointing to the latest revision of the International Money Fund (IMF), which raised its forecast for 2021 GDP growth by 6%, the agency said this improved IMF outlook, along with swift vaccine rollouts in the US, upcoming hefty stimulus packages in the country, and improving economic data from China, led to a better global oil demand forecast.

IEA Forecasts 6% Increase in Global Oil Demand

The United States International Energy Agency, IEA, has forecasted 6% increase in global oil demand for year 2021 in its monthly oil report, indicating recovery from the pandemic level.

The United States energy agency positive outlook in oil demand is on the back of better economic forecasts and robust, prompt fiscal indicators.

Having contracted by 8.7 million barrels per day (bpd) in 2020, global oil demand is estimated to rise by 5.7 million bpd to an average of 96.7 million bpd, the IEA said in its monthly oil report.

The agency warned that the recovery remains fragile with the number of Covid-19 cases surging in some major consuming countries, especially in some European countries as covid-19 vaccines fail.

Recalled that International Money Fund (IMF) recently increase global economic growth forecast for 2021 by 6%.

IEA stated in the report that improved IMF outlook, swift vaccine rollouts in the US, and hefty stimulus packages in the country, as well as improving economic data from China, led to a better global oil demand forecast.

In 2021, the highest consumption is forecast to be in the Asia Pacific region with 35.9 million barrels per day, followed by the Americas with 30.3 million barrels and Europe with 13.9 million barrels.

Global supply rises

The IEA said global oil supply increased by 1.73 million bpd in March to 92.89 million bpd mostly with the help of Saudi Arabia’s extra cut of 1 million bpd for February, March and April.

The Organisation of Petroleum Exporting Countries (OPEC) crude oil production reached 25.05 million bpd in March, recording an increase of 210,000 bpd compared to the previous month.

Read Also: Crude Prices Jump as OPEC+ Agreed to Gradual Output Raise

Also, Non-OPEC production also saw an increase of almost 1.51 million bpd to 62.68 million bpd.

Oil Prices Rise as IEA Forecasts 6% Increase in Global Demand

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