LONDON: Oil prices edged higher on Wednesday, holding on to Tuesday’s gains on a robust demand growth forecast from OPEC and a sharp decline in U.S. fuel stocks.
Brent crude futures were up 34 cents, or 0.41%, to $83.11 a barrel at 1519 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 31 cents, or 0.4%, at $78.18.
Geopolitical factors were also partly responsible for gains of about 1% on Tuesday, with diplomatic deadlocks in the Middle East and Russia-Ukraine conflicts offsetting expectations of a deferred start to interest rate cuts in the United States.
“Currently events around Israel and Gaza, together with Ukraine’s war against Russia, weighs more on sentiment than disappointing U.S. inflation data,” said PVM analyst Tamas Varga.
Oil prices rise on ME tensions
Chicago Fed President Austan Goolsbee said on Wednesday that the U.S. Federal Reserve’s path to 2% inflation would still be on track even if price increases run above expectation in coming months, adding that the central bank should be wary of waiting too long before cutting rates.
The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Tuesday that global oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.
In other OPEC news, Iraqi Prime Minister Mohammed Shia al-Sudani held a meeting with Saudi Energy Minister Prince Abdulaziz bin Salman, in which he highlighted the importance of coordination between the two countries to maintain stability in oil markets.
Kazakhstan, meanwhile, said it will compensate for its oil overproduction in January in the coming four months to meet its commitment to OPEC+ production cuts.
U.S. gasoline and distillate fuel stockpiles plunged by 7.23 million barrels and 4.02 million barrels respectively in the week to Feb. 9, according to data from the American Petroleum Institute, both much larger declines than analysts expected.
At the same time, U.S. crude oil inventories rose by a much larger than expected 8.52 million barrels as refinery downtime cuts both crude consumption and fuel production.
Official inventory data from the U.S. Energy Information Administration is due at 1530 GMT.
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