Global oil prices surged on Thursday, driven by a promising outlook from the Organization of the Petroleum Exporting Countries (OPEC), projecting robust growth in global oil demand over the next two years.
Brent Crude futures experienced a 0.3 percent gain, rising 21 cents to $78.09 per barrel. Similarly, US West Texas Intermediate futures saw an uptick of 0.6 percent, climbing 40 cents to $72.96 by 0505 GMT, per press report.
According to the monthly report from OPEC, the cartel expects global oil demand to increase by 1.85 million barrels per day (bpd) and reach 106.21 million bpd by 2025. This projection remains consistent with the December forecast, which indicates an upswing of 2.25 million bpd for 2024.
Despite these positive indicators, market analysts noted that Brent crude prices were caught within a narrow range. "Brent crude prices remain broadly stuck in a range as they have been over the past two weeks, as market participants struggle to weigh mixed demand-supply dynamics with prevailing geopolitical tensions," Yeap Jun Rong, a market strategist at IG, remarked.
Challenges, such as an unforeseen increase in US crude stockpiles and the recent series of attacks on ships in the Red Sea by Yemen's Houthis, have led businesses to reroute their cargo shipments around the African continent. As a result, cargo delivery times have become longer and operational costs have risen. In addition, North Dakota, the leading oil-producing state in the US, has had to substantially decrease oil output from 650,000 to 700,000 bpd due to the freezing temperatures (-18oC) that the state is currently weathering.
Further uncertainty looms as the American government's data on oil inventories is set to be released at 11 a.m. ET (1600 GMT) on Thursday. Preliminary figures on Wednesday from the American Petroleum Institute indicated a rise in domestic crude stockpiles by 480,000 barrels.
Despite the challenges, the International Energy Agency (IEA) expressed optimism, foreseeing oil markets being in a “comfortable and balanced position” for the year. Fatih Birol, the executive director of the IEA, communicated this during the Reuters Global Markets Forum on Wednesday.