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Oil rises as IEA hikes 2022 demand growth forecast
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By Ahmad Ghaddar
LONDON (Reuters) -Oil prices rose by over 1% on Thursday after the International Energy Agency 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%, to $98.69 a barrel by 1348 GMT, while U.S. West Texas Intermediate crude futures rose $1.45, or 1.6%, to $93.38.
“Natural gas and electricity prices have soared to new records, incentivising gas-to-oil https://www.reuters.com/article/iea-oil-idAFL8N2ZN2J8 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 Organization 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/M]
OPEC expects 2022 oil demand to rise by 3.1 million bpd, down 260,000 bpd from the previous forecast. However, it still sees a higher overall global oil demand figure than the IEA for 2022.
A rise in U.S. oil inventories last week and the resumption of crude flows on a pipeline supplying central Europe capped further price gains.
U.S. crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. 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 6% 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 https://www.reuters.com/business/energy/russia-suspends-oil-exports-via-southern-leg-druzhba-pipeline-due-transit-2022-08-09 said on Tuesday.
Meanwhile, physical oil prices https://www.reuters.com/business/energy/global-physical-oil-market-weakens-recession-jitters-mount-2022-08-10 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.
(Additinoal reporting by Muyu Xu in Singapore; editing by Kim Coghill, Jason Neely and Barbara Lewis)
Oil demand growth refers to the increase in the consumption of oil over a specific period, often measured in barrels per day. It is influenced by various factors, including economic conditions and energy prices.
Brent crude is a major trading classification of crude oil originating from the North Sea. It serves as a global benchmark for oil prices and is used to price two-thirds of the world's oil.
U.S. crude oil inventories refer to the stockpiles of crude oil held in storage facilities across the United States. These inventories are monitored to assess supply levels and influence oil prices.
Natural gas prices are significant as they can influence the energy market, prompting consumers to switch from gas to oil, thereby impacting oil demand and prices.
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