Oil prices witnessed a notable uptick on Thursday following the release of the International Energy Agency’s (IEA) updated oil market report, which included a positive revision to demand growth projections and a reduction in the forecast for non-OPEC supply in 2024.
In response to the report, Brent crude futures for May climbed by 72 cents, or 0.86%, reaching $84.75 per barrel by 1021 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude for April saw an increase of 83 cents, or 1.04%, reaching $80.55.
The IEA’s forecast for first-quarter global demand growth was revised upwards to 1.7 million barrels per day (bpd), driven by an improved U.S. economic outlook and heightened bunkering demand due to longer voyages avoiding the Red Sea.
Despite raising its 2024 demand growth projection by 110,000 bpd, the IEA cautioned about the impact of the global economic slowdown on oil usage. Anticipating a slowdown in overall demand growth to 1.3 million bpd this year, down from 2.3 million bpd in the previous year.
PVM analyst Tamas Varga remarked, “Whilst the IEA’s view on global oil balance is still more than a country mile away from OPEC’s prognosis, this report does nothing to dent the developing upbeat mood.”
Furthermore, the IEA adjusted its 2024 supply forecast downwards, considering recent cuts from the OPEC+ coalition and reduced output from non-OPEC countries. It now expects oil supply to increase by 800,000 bpd to reach 102.9 million bpd this year.
UBS analyst Giovanni Staunovo described the report as “quite bullish,” highlighting the upward revisions in demand growth and lower supply growth estimates.
The recent surge in oil prices saw Brent closing above $84 a barrel for the first time since November, driven by an optimistic U.S. demand outlook and escalating geopolitical risks.
Additionally, U.S. gasoline inventories recorded a sixth consecutive weekly decline, dropping by 5.7 million barrels to 234.1 million barrels, surpassing expectations of a draw of 1.9 million barrels as reported by the Energy Information Administration (EIA).
Supporting the demand side, the U.S. purchased approximately 3.25 million barrels of oil for delivery to the Strategic Petroleum Reserve in August.
Meanwhile, on the supply front, Ukrainian drone strikes targeting Russian refining facilities persisted for a second consecutive day on Wednesday.