Oil spot price: WTI and Brent rise on expanding global oil demand outlooks

Distillate inventories, including diesel and heating oil, are being picked to have fallen by 500,000 barrels last week to 123.45 million barrels. That number would send stocks to 17 percent below their five-year average for this time of the year.

Gasoline stockpiles are being forecast to have increased by 1.5 million barrels last week. Crude oil supplies are projected to be up 1.7 million barrels, which would make for the first increase since November.

The International Energy Agency (IEA) yesterday raised its forecasts for global oil consumption, citing strengthening economies across the planet.

Fat Prophets resource analyst David Lennox writes today that “demand in the US appears to be on the way up” and notes that the current price action is supported by the IEA report.

The IEA’s monthly report projects that global oil consumption will rise by 1.4 percent this year, some 1.3 million barrels per day, to a record level of 92.5 million bpd on average. This adds an additional 90,000 bpd to the December forecast, which represented a first increase in calendar year demand in developed countries since 2010.

The IEA said that the US was the biggest driver of growth last year and that economic growth in the country will consume more oil, even as US shale oil production reaches record highs.

Last year’s US demand estimate was revised up by 180,000 bpd to 18.9 million.

Later today, the industry-funded American Petroleum Institute (API) is due to release its separate inventories report.
Brent crude remains above $107 a barrel today, also supported by the outlook for increased oil demand this year. Yesterday, Brent reached a near two-week peak at $108.00.

Also yesterday, the International Monetary Fund (IMF) raised its global growth forecast for the first time in nearly two years, expressing the view that advanced nations could pick up the mantle of growth from emerging markets.

CMC Markets chief strategist Michael McCarthy writes that “improvement in global industrial production will translate to higher energy demand”.

He believes that “technical factors and better demand outlook” will probably support oil prices and sees Brent supported between $105.50 and $106 in the short term but with the prospect of bounce to around $108. Should that transpire, McCarthy foresees further rises in store – Brent to about $110 and WTI to $99.50.

In addition to the more bullish demand outlook, ongoing political tensions in the Middle East continue to support oil prices.

Natural gas

Natural gas is currently trading at $4.48 per 1,000 cubic feet, after earlier today reaching $4.49, its highest level since the 23 December two-year top.

The EIA also reports on Natural Gas Inventories tomorrow and analysts are expecting a drop of some 112 billion cubic feet.