LONDON: Oil prices firmed on Tuesday after the International Energy Agency (IEA) raised its demand growth forecasts, adding to bullish sentiment from the previous day’s OPEC guidance, while U.S. data showed inflation in the world’s biggest economy was slowing.
Brent crude futures were up 61 cents, or 0.7%, to $83.13 a barrel by 1429 GMT. U.S. WTI crude futures climbed 63 cents, or 0.8%, to $78.89.
The IEA raised its oil demand growth forecasts for this year and next 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.
The Organization of the Petroleum Exporting Countries (OPEC) on Monday 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.
Oil gains as OPEC report dampens demand concerns
“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.
U.S. consumer prices were unchanged on a month-on-month basis in October amid lower gasoline prices, and underlying inflation showed signs of slowing in October, official data showed on Tuesday, supporting views that the Federal Reserve was probably done raising interest rates.
Higher interest rates typically have a weakening impact on oil demand, as they slow down economic activity.
Oil prices had slid last week to their lowest levels since July, hurt by concerns that demand could wane in the U.S. and China, the top consumers. 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 U.S. 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 last year, which could further buoy demand.
A U.S. crackdown on Russian oil exports could also disrupt supply, supporting prices further.
The U.S. 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.
Iraq’s oil minister said he is optimistic a deal to resume oil exports can be reached with the Kurdistan Regional Government (KRG) in the coming days, but oil officials said more time is needed to resolve lingering issues between Baghdad and Erbil.
Turkey has halted 450,000 bpd of northern exports through the pipeline since March 25 after an International Chamber of Commerce arbitration ruling.
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