Crude oil prices hit a four-month high on Thursday, with the U.S. benchmark crossing over the $80 mark and Brent passing $85 per barrel after changes in supply and demand predictions that bring OPEC+ and International Energy Agency (IEA) forecasts into closer alignment.
After gaining nearly $3 on Wednesday, at 3:43 p.m. ET on Thursday, Brent crude was trading at $85.23, up 1.43% on the day. West Texas Intermediate (WTI) was trading at $81.13, up 1.77% on the day.
Earlier on Thursday, the IEA tweaked its forecasts for this year, predicting a tighter market and higher demand growth than previously anticipated, primarily due to disruption from Houthi attacks on Red Sea shipping lanes.
Since November last year, the IEA has upwardly revised its oil demand growth forecasts for 2024 four times–each time primarily as a result of Red Sea-related supply disruption potential, noting that the “global economic slowdown acts as an additional headwind to oil use”.
The IEA’s forecasts have contradicted OPEC+ forecasts for some time, with the international energy agency in May 2021 saying there was no need for new oil and gas exploration any longer due to the pace of the energy transition. February 2024 oil demand forecasts from the IEA and OPEC+ diverged by over 1 million bpd.
The IEA has now slashed its 2024 supply forecast to 102.9 million bpd this year.
In its Oil Market Report for March, the IEA now assumes that OPEC+ would continue with the voluntary cuts through 2024, which prompted the agency to change its view on the supply-demand balance this year.
“Demand is staying high, while supplies are getting tighter, particularly on the fuel side. The refining margins are also very strong and a positive for crude demand,” Reuters quoted Dennis Kissler, senior vice president of trading at BOK Financial, as saying on Thursday, noting that near-six-month-high crack spreads were prompting refiners to process more crude.
By Tom Kool for Oilprice.com
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