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Breaking News:

OPEC Lifts Production in February

Oil Prices Tick Higher On Optimistic Economic Forecasts

Oil prices saw another rise on Tuesday morning on optimistic forecasts published by the International Monetary Fund (IMF).

On Tuesday, the IMF raised its 2023 global growth estimates based on promising economic activity in Q1. For 2023, the IMF is now estimating a 3% GDP growth—up 0.2 percentage points from its forecast published in April. Its 2024 remains unchanged at 3.0%.

Oil prices rose on the news, with WTI surpassing the $79 mark. WTI was trading at $79.05 as of 10:52 am ET, up $0.31 (0.39%) on the day. Brent crude rose above $83, up $0.29 (+0.35%) on the day.

Oil prices will now be subjected to estimates from the American Petroleum Institute (API) later this afternoon on U.S. crude oil and crude products inventory moves.

While higher than previous estimates, the IMF's forecast is still reflective of economic weakness and below the average 3.8% GDP growth seen across the previous decade.

"What we are seeing when we look five years out is actually close to 3.0%, maybe a little bit above 3.0%. This is a significant slowdown compared to what we had pre-COVID," IMF chief economist Pierre-Olivier Gourinchas told Reuters in a Tuesday interview.

The IMF stated in its forecast that while shipping costs and delivery times have returned to pre-pandemic levels now that the WHO has ended the global health emergency, inflation continues to eat away at household buying power. In addition, high interest rates have raised the cost of borrowing, while savings built during the pandemic are receding.

The IMF included a warning in its outlook that inflation could rise further should the war in Ukraine worsen, or if extreme temperatures raise commodity prices further.

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Crude oil prices are now the highest they've been since mid-April.

By Julianne Geiger for Oilprice.com

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