Oil climbed toward a 10-month high as the International Energy Agency added to warnings of a supply shortfall through the end of the year.
West Texas Intermediate traded near $89 a barrel, after dipping 0.4% on Wednesday. Demand will eclipse supply by 1.2 million barrels a day on average during the second half, the IEA projected Wednesday. That came a day after OPEC and the US also said they saw global consumption exceeding production.
The bullish outlooks added momentum to a rally that started in mid-June as Saudi Arabia and Russia curbed supply while US and Chinese demand proved relatively resilient. WTI has risen 13% over the past three weeks, and timespreads are in a bullish backwardated pattern, indicating scarce supply.
Crude also tracked gains in broader equity markets. A gauge of the dollar, meanwhile, edged lower for a second day, making commodities priced in the currency more attractive for many buyers.
There was some bearish news, however, with government data released Wednesday showing US nationwide crude inventories snapped a streak of declines to rise for the first time in five weeks amid the highest imports since 2019. Inventories at the key storage hub in Cushing, Oklahoma declined.
“It may take more than a single data point to overturn the tight-supplies narrative,” said Yeap Jun Rong, market strategist at IG Asia Pte, referring to the higher US stockpile levels. “For now, technical conditions are heading into near-term overbought territory,” risking a possible pullback in prices, he said.