Crude oil prices today started trade with a gain after the American Petroleum Institute reported a draw in inventories and OPEC reiterated its demand growth forecast.
Brent crude traded above $82 per barrel in mid-morning trade in Asia, with West Texas Intermediate topping $78 per barrel after OPEC repeated it expected global oil demand to expand by 2.25 million barrels daily this year.
The forecast was accompanied by a prediction of stronger than previously expected economic growth. "While some downside risks persist, a continuation of the expected momentum from the beginning of the year could result in additional upside potential for global economic growth in 2024," OPEC said.
There also appears to be a strong belief that the Fed will start cutting rates in the summer even though the central bank has not given any indications about that, still wary about inflation figures. These rose 0.4% in February from 0.3% in January but analysts seem firm in their perception that inflation is in fact slowing down.
At the same time, the American Petroleum Institute reported inventory draws in both crude oil and fuels, which also helped push prices higher and supported OPEC's view on oil demand. The Energy Information Administration is reporting inventory figures later today. If it also reports a draw, it would be the first one after seven consecutive weeks of builds, Bloomberg noted in a report.
On the other hand, the Energy Information Administration said in its latest Short-Term Energy Outlook that U.S. oil production could grow more than previously expected this year, suggesting headwinds for prices in the form of non-OPEC production growth remain very much in place. Bearish factors can be found in OPEC, too, with Iraq once again exceeding its production quotas-for the second month in a row in February.
Yet the EIA reduced its forecast for global oil output this year, which gave it justification to predict higher oil prices over the rest of the year. This will begin as soon as next quarter when lower OPEC production will push global inventories lower, lending substantial support to prices and boosting Brent crude to $88 per barrel, the EIA predicted.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More