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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Prices Rise On Upbeat Demand Forecasts

  • Oil prices were up early on Thursday morning, with Brent nearing the $86 mark and WTI trading above $79.
  • Upbeat demand forecasts from both OPEC and the IEA were enough to counter the EIA’s latest inventory report.
  • The primary headwind for oil prices at the moment remains concerns that the Fed might aggressively hike interest rates and hurt oil demand.
oil prices

Crude oil prices rose in Asian pre-noon trade today after OPEC and the International Energy Agency raised their demand forecasts for the year, shaking off EIA’s latest weekly inventory report that estimated a large inventory build in the United States.

In its latest Monthly Oil Market Report, OPEC revised its 2023 oil demand projections up to 2.3 million barrels daily earlier this week. That represented a 100,000-bpd change from last month’s forecast.

Of this, 2 million bpd in demand growth will come from non-OECD countries, the oil group said.

A day later, the International Energy Agency forecasted oil demand this year would hit a record high of 101.9 million barrels daily, rising by 2 million bpd from last year. The IEA’s upward revision was also to the tune of 100,000 bpd from last month’s projections.

In China, the IEA said, demand for crude oil will rise by some 900,000 barrels daily.

Meanwhile, the U.S. Energy Information Administration estimated crude oil inventories had added 16.3 million barrels in the week to February 10, confirming the estimate of the American Petroleum Institute, published a day earlier, but topping it substantially. The API had estimated the weekly inventory build at about 10 million barrels.

After the initial drop in prices following the release of the EIA’s report, benchmarks started climbing again, pushed by the bullish demand forecasts of OPEC and the IEA.

Analysts also noted that the massive inventory build was more the result of a data adjustment than the actual accumulation of crude in storage.

"Once everyone realized the adjustment threw off the EIA data, scepticism about the big (crude storage) build crept into the market. It's a one-off," John Kilduff, partner at investment advisory Again Capital, told Reuters.

At the time of writing, Brent crude was trading close to $86 per barrel and WTI was changing hands for more than $79 per barrel.

Headwinds remain, led by continued concern about Fed rate hikes that would push the dollar higher, dampening appetite for crude.

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By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on February 16 2023 said:
    It is obvious that the global oil market believes an upbeat demand forecast from OPEC+ rather than announcements by the American Petroleum Institute (API) or the US Energy Information Administration (EIA) about oil inventory build.

    The market questions these announcements because they always seem to come at the time oil prices start to rise. The regularity and the repetitiveness of these announcements couldn’t be coincidental. Therefore the market is reaching the conclusion that they are a ploy by the EIA and to some extent the API to manipulate prices and force them down.

    Moreover, continued aggressive hiking of interest rates by the US Fed could become more counterproductive as they start to limit the growth potential of the US economy.

    OPEC+ is forecasting that the global economy will grow by 2.3 million barrels a day (mbd) from 101.3 mbd in 2022 to 103.6 mbd in 2023.

    Moreover, China’s own demand in 2023 is projected to hit 17.1 mbd necessitating an import of 13.2 mbd. China will account for 50% of global demand growth or 1.15 mbd.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • J Bruan on February 16 2023 said:
    Or does the upbeat demand forecast from OPEC always seem to come when the oil price starts to sink?

Leave a comment




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