By Adedapo Adesanya
The oil market soared on Thursday after the International Energy Agency (IEA) joined the Organisation of the Petroleum Exporting Countries (OPEC) in forecasting strong growth in global oil demand.
The IEA monthly report said it expects oil demand to grow by 1.24 million barrels per day in 2024, up 180,000 barrels per day from its previous projection.
This helped the Brent crude futures to rise by $1.22 or 1.6 per cent to $79.10 a barrel, as the US West Texas Intermediate crude futures gained $1.52 or 2 per cent to trade at $74.08 per barrel.
The Paris-based agency in its monthly report released on Thursday projected a significantly slower growth rate this year, due to “macroeconomic headwinds, tighter efficiency standards, and an expanding EV fleet.”
In December, the IEA revised its 2024 demand growth projection by around 130,000 barrels per day and expected this year’s demand growth at 1.1 million million barrels per day.
Oil demand growth is projected to ease from 2.3 million barrels per day in 2023 to 1.2 million barrels per day in 2024, the agency said, noting that oil demand growth slowed to 1.7 million barrels per day year-over-year in the fourth quarter of 2023 – well below the 3.2 million barrels per day growth registered during the second and third quarters of 2023.
On Wednesday, OPEC said it expects demand growth of 2.25 million barrels per day this year, unchanged from its forecast in December. The producer group also said oil demand is expected to rise by a robust 1.85 million barrels per day in 2025 to 106.21 million barrels per day.
Support came from US crude production disruption as about 40 per cent of oil output in North Dakota’s oil output remained shut-in due to extreme cold weather and operational challenges.
Oil traders continued to worry about geopolitical risks in the Middle East. Pakistan conducted strikes inside Iran, targeting Baluchi separatist militants.
Oil tankers that had diverted away from the Red Sea have turned back and passed through the Bab al-Mandab Strait, ship-tracking data shows, even as tensions in the region continued to disrupt global shipping and trade.
This compared with a moderate inventory build of 1.3 million barrels for the previous week, which also saw another round of massive increases in fuel inventories that drove prices lower at the time.
Modupe Gbadeyanka