Oil prices rise as revised IEA forecasts suggest tighter market

Oil prices rose on Thursday as investors digested the International Energy Agency’s (IEA) latest oil market report – in which it predicts a tighter market in 2024 – as well as fresh U.S. economic data.

Brent crude futures for May rose 70 cents, or 0.83%, to $84.73 a barrel by 1346 GMT. U.S. West Texas Intermediate (WTI) crude for April was up 88 cents, or 1.1%, at $80.60.

Brent futures had settled above $84 a barrel for the first time since November on Wednesday, with both contracts chalking up gains close to 3%.

Brent’s intra-day high of $84.87 on Thursday marked its highest since Nov. 7.

The IEA raised its 2024 demand growth forecast by 110,000 bpd from its previous report but warned that “the global economic slowdown acts as an additional headwind to oil use”. The agency now expects overall demand growth to slow to 1.3 million bpd this year after growth of 2.3 million bpd last year.

“Whilst the IEA’s view on global oil balance is still more than a country mile away from OPEC’s prognosis, this report does nothing to dent the developing upbeat mood,” said PVM analyst Tamas Varga. The IEA also cut its 2024 supply forecast and now expects oil supply to rise by 800,000 bpd to 102.9 million bpd this year. “Upward revisions on demand growth and lower supply growth estimates result in almost a 400,000 bpd tighter market compared to last month,” said UBS analyst Giovanni Staunovo.

U.S. producer prices rose 0.6% in February, partly because gasoline prices increased by more than forecasts for a 0.3% advance.

Retail sales rebounded on the month, but consumer spending showed signs of slowing as households grapple with inflation and higher borrowing costs.

Traders’ bets on a June start to interest rate cuts by the U.S. Federal Reserve were largely unmoved after the data.

Elsewhere, Russia’s energy ministry on Thursday said it expects a rise in crude exports because of refinery outages.

Ukrainian drone strikes on Russian refining facilities continued for a second day on Wednesday, targeting four large oil refineries.

Russia’s seaborne fuel exports fell 1.5% from the previous month in February because of refinery downtime stemming from Ukrainian drone attacks and fires.