Oil prices briefly touch five-month high
Oil prices rose on Thursday, one day after the International Energy Agency released its report forecasting a tighter crude market due to increased demand.
By 2:25 p.m. EDT, Brent crude was up by 35 cents to $55.51/barrel, after touching a five-month high of $55.99 earlier in the session. US WTI was up 67 cents to $49.97/barrel. At one point, WTI had hit $50.50/barrel, the highest since May 25.
In the past three months, benchmark Brent has risen over $10/barrel and is close to where it began 2017.
On Wednesday, the IEA increased its estimate of world oil demand for next year to 1.6 million barrels per day (b/d) from 1.5 million b/d.
According to the agency, the global glut that had dragged down oil prices since 2014 is shrinking due to strong demand in Europe and the US as well as drops in production by OPEC and non-OPEC members.
“The IEA revising up its 2017 global oil demand growth forecast, together with persistent weakness in the U.S. dollar index, has prompted bullish sentiment in the oil market. Anticipation is growing that this could quicken the pace of oil market rebalancing,” Abhishek Kumar, Senior Energy Analyst at Interfax Energy’s Global Gas Analytics told Reuters.
The US dollar was down 0.2 per cent drop against a basket of currencies, which made oil cheaper for those using other currencies. Last week, the greenback was down to its lowest level since the beginning of 2015.
“Unrest in Iraq and Venezuela should keep output there in check, regional crude oil contangos have dissipated and stocks are gradually declining,” Reuters reports Barclays Research said in a note.
Speaking with Reuters on Thursday, BP Chief Executive Bob Dudley said oil prices are likely to stay between $50 and $60/barrel.
“We’re all trying to make our way in this world of between $50 and $60 and I would expect that to continue,” he said.
Oil price gains come despite data from the US Energy Information Administration showing an increase in US crude inventories last week due to Hurricane Harvey. Last week, US oil stocks rose by 5.9 million barrels.
Gasoline stockpiles fell by 8.4 million barrels, the biggest weekly drop since the agency began recording levels in 1990. US distillate stocks were down by 3.2 million barrels.
