Oil lifts as energy agency boosts demand growth forecast

London — Oil prices edged higher on Tuesday after the International Energy Agency (IEA) raised its demand growth forecasts, adding to bullish sentiment from the previous day’s Opec guidance.

Brent crude futures gained 20c, or 0.2%, to $82.72 a barrel by 9.18am GMT. US WTI crude futures climbed 21c, or 0.3%, to $78.47.

The IEA raised its oil demand growth forecasts for 2023 and 2024 despite an expected slowdown in economic growth in nearly all major economies.

The agency’s 2023 growth forecast was lifted to 2.4-million barrels per day (bpd) from 2.3-million bpd. For 2024, it raised the forecast to 930,000 bpd from 880,000 bpd.

On Monday, Opec blamed speculators for a recent drop in prices. The oil producer group made a slight upward revision to its forecast for 2023 global oil demand growth and stuck to its relatively high projection for 2024.

“The central bank of the oil market sees a sturdy economy resulting in strong demand, not just for its oil but globally, too,” PVM Oil analyst Tamas Varga said of Opec’s findings.

Oil prices had slid last week to their lowest since July, hurt by concerns that demand could wane in top consumers the US and China. Chinese consumer prices swung lower in October to levels not seen since the Covid-19 pandemic and exports for the month contracted more than forecast.

Meanwhile, the US energy department plans to buy 1.2-million barrels of oil to help to replenish the Strategic Petroleum Reserve after selling record volumes from the stockpile in 2022, which could further buoy demand.

A US crackdown on Russian oil exports could also disrupt supply, supporting prices further.

The US treasury department has sent notices to ship management companies requesting information about 100 vessels it suspects of violating Western sanctions on Russian oil, the biggest step by Washington since a price cap was imposed in an effort to restrict oil revenue to Moscow.

Discussions in Iraq to resume oil flows through the Iraq-Turkey pipeline could also weigh on fundamentals, some analysts say.

Iraq’s oil minister expects to reach an agreement with the Kurdistan Regional Government and foreign oil companies to resume oil production from the Kurdish region’s oilfields and resume northern oil exports through the pipeline.

Turkey has halted 450,000 bpd of northern exports through the pipeline since March 25 after an International Chamber of Commerce arbitration ruling.

US inflation data due on Tuesday will also be on investors’ radar along with US producer price data on Wednesday. 

Reuters