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.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- China Makes Big Moves To Secure Iraqi Oil
- Canada’s Largest Gas Producer Finds Way To Sell Its Gas At 10x Its Usual Price
- The IEA Expects Global Oil Demand Hit A Record High In 2023