Oil prices advance on improved demand forecasts

London — Oil prices rose on Thursday as the International Energy Agency (IEA) joined producer group Opec in forecasting relatively strong growth in global oil demand this year, with price impetus also coming from disruption to US output and geopolitical risks in the Middle East.

Brent crude futures gained 37c, or 0.5%, to $78.25 a barrel by 10.05am GMT while West Texas Intermediate added 55cs, or 0.8%, to $73.11.

The IEA now expects oil demand to grow by 1.24-million barrels a day in 2024, up 180,000 bbl/day from its previous projection, it said in a monthly report, citing improved economic growth and lower crude prices in the fourth quarter.

Opec said on Wednesday it expected demand growth of 2.25-million bbl/day this year, unchanged from its forecast in December. The producer group also said oil demand is expected to rise by 1.85-million bbl/day 2025 to 106.21-million bbl/day.

IEA executive director Fatih Birol told the Reuters Global Markets Forum on Wednesday he expects oil markets to be in a “comfortable and balanced position” this year despite Middle East tensions, rising supply and a slowing demand growth outlook.

Oil’s rangebound trading in recent days reinforces the narrative that investors are shrugging off concern that tankers may be at risk from attacks in the Red Sea, said Ehsan Khoman, an analyst at banking group MUFG.

Attacks by Yemen-based Houthi militants against ships in the Red Sea have forced many companies to divert cargoes around Africa, adding to journey times and costs. The US conducted another round of strikes against Houthi targets in Yemen on Wednesday in retaliation for the attacks on shipping.

The Iran-aligned Houthis say they are acting in solidarity with Palestinians during Israel’s war with Gaza.

In the latest sign of escalating geopolitical tensions, Pakistan conducted strikes inside Iran, targeting Balochi separatist militants, the country’s foreign ministry said, two days after Iranian strikes inside Pakistani territory.

In top oil-producing US state North Dakota, meanwhile, oil output fell by 650,000 to 700,000 bbl/day of extreme cold weather, the state said.

US government data on oil inventories is due at 4pm GMT. Domestic crude stockpiles rose by 480,000 barrels last week, according to market sources citing American Petroleum Institute figures.

Reuters