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Oil prices were nearing a 4% gain on Thursday as the U.S. dollar weakened and the International Energy Agency (IEA) upgraded its demand forecast to a 1.1 million barrel-per-day increase next year.
Brent crude was trading at $76.70 on Thursday at 11:50 a.m. ET, up 3.29%. West Texas Intermediate (WTI), the U.S. benchmark, was trading at $71.87, up 3.45%.
Earlier on Thursday, the IEA boosted its 2024 demand forecast by 130,000 bpd based on U.S. supply growth that “continues to defy expectations”.
However, the agency revised down its Q4 demand growth forecast by close to 400,000 bpd, over half of the slashing due to European consumption expectations.
Also on Thursday, the IEA said that global observed oil inventories fell in October for the first time in four months, shedding 19.6 million barrels for that month, mostly in refined petroleum stocks.
At the same time, Rystad Energy has forecast that India’s oil demand growth will fall to 150,000 bpd next year, from 290,000 bpd this year, with the post-pandemic rebound set to lose momentum in India and China next year.
The IEA and OPEC have been at odds over demand forecasts, which also drive market sentiment, with the IEA staunchly advocating for a green transition and offering lower demand forecasts much higher oil demand growth for next year (2.2 million bpd).
A weakening dollar following the Federal Reserve’s meeting notes on Wednesday have also contributed to an uptick in oil prices. The Fed left interest rates unchanged on Wednesday and gave its strongest signals to date that it is adopting a less hawkish stance, with the potential for three rate cuts in 2024. Those rate cuts indicate lower borrowing costs next year, which also helps to buoy oil prices and has so far pushed the U.S. dollar to a four-month low on Thursday.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com