Oil rises as IEA hikes 2022 demand growth forecast

Brent crude futures gained $1.29, or 1.3 per cent, to $98.69 a barrel by 1348GMT, while US West Texas Intermediate crude futures rose $1.45, or 1.6 per cent, to $93.38



Pumpjacks work in a field near Lovington, N.M. US crude oil stocks rose by 5.5 million barrels in the most recent week, the US Energy Information Administration said, more than the expected increase of 73,000 barrels.— File photo
Pumpjacks work in a field near Lovington, N.M. US crude oil stocks rose by 5.5 million barrels in the most recent week, the US Energy Information Administration said, more than the expected increase of 73,000 barrels.— File photo

By Reuters

Published: Thu 11 Aug 2022, 8:13 PM

Last updated: Thu 11 Aug 2022, 8:14 PM

Oil prices rose by over one per cent on Thursday after the International Energy Agency (IEA) raised its oil demand growth forecast for this year as soaring natural gas prices lead some consumers to switch to oil.

Brent crude futures gained $1.29, or 1.3 per cent, to $98.69 a barrel by 1348GMT, while US West Texas Intermediate crude futures rose $1.45, or 1.6 per cent, to $93.38.

“Natural gas and electricity prices have soared to new records, incentivising gas-to-oil switching in some countries,” the Paris-based agency said in its monthly oil report, in which it raised its outlook for 2022 demand by 380,000 barrels per day (bpd).

By contrast, the Organisation of the Petroleum Exporting Countries (Opec) on Thursday cut its 2022 forecast for growth in world oil demand, citing the economic impact of Russia’s invasion of Ukraine, high inflation and efforts to contain the pandemic.

Opec expects 2022 oil demand to rise by 3.1 million bpd, down 260,000bpd from the previous forecast. However, it still sees a higher overall global oil demand figure than the IEA for 2022.

A rise in US oil inventories last week and the resumption of crude flows on a pipeline supplying central Europe capped further price gains.

US crude oil stocks rose by 5.5 million barrels in the most recent week, the US Energy Information Administration said, more than the expected increase of 73,000 barrels.

Gasoline product supplied rose in the most recent week to 9.1 million barrels per day, though that figure shows demand down six per cent over the last four weeks compared with the year-ago period.

The premium for front-month WTI futures over barrels loading in six months’ time was pegged at $4.38 a barrel on Thursday, the lowest in four months, indicating easing tightness in prompt supplies.

The resumption of flows on the southern leg of the Russia-to-Europe Druzhba pipeline further calmed market worries over global supply.

Russian state oil pipeline monopoly Transneft restarted oil flows via the southern leg of the Druzhba oil pipeline. Ukraine had suspended Russian oil pipeline flows to parts of central Europe since early this month because Western sanctions prevented it from receiving transit fees from Moscow, Transneft said on Tuesday.

Meanwhile, physical oil prices around the world have begun to sag alongside futures, reflecting easing concerns over Russian-led supply disruptions and heightened worries about a possible global economic slowdown. — Reuters


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