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Oil prices edge up following crude outlook reports

A pump jack in Yates Oilfield in Texas. West Texas Intermediate prices rose to more than $78 a barrel Reuters
A pump jack in Yates Oilfield in Texas. West Texas Intermediate prices rose to more than $78 a barrel
  • EIA forecasts tighter supplies
  • Brent crude up 1%
  • 104 million bpd demand this year

Oil prices rose early on Wednesday, supported by Opec’s encouraging outlook for crude demand and a report by the US Energy Information Administration (EIA) forecasting tighter world oil supplies.

Brent prices traded up 1 percent, close to $83 per barrel, while West Texas Intermediate was up the same at just over $78 per barrel.

Saudi Arabia, the world’s largest oil producer, needs oil to sell at $86 per barrel if the government is to cover its costs, according to analysts.

The higher prices came despite Opec reporting on Tuesday that its oil production increased by 203,000 barrels per day (bpd).

Output increased mainly in Libya and Nigeria, while production in Iran and Iraq decreased, Opec said, citing secondary sources.

Instead, markets took their cue from the EIA, an agency of the US Federal Statistical System, which reduced its forecast for oil production growth in 2024, as a result of a decision earlier this month by Opec+ to extend its output curbs to the end of June.

“Because some Opec+ members are extending these voluntary production cuts and because Russia added new voluntary production cuts, we now expect oil markets to be much tighter in the second quarter of 2024 than we previously expected,” the EIA said. Oil market tightness implies higher prices.

The EIA report forecast global oil demand growing by 1.4 million bpd in 2024, as US oil output increases to nearly 13.2 million bpd, up from 13.1 million bpd in 2024.

Opec posted an unchanged 2024 global oil demand growth forecast at 2.2 million barrels a day, year on year, and at 1.8 million bpd in 2025.

The oil bloc said in a monthly report that the world economy will continue to grow slightly more strongly at 2.8 percent year on year in 2024. Its forecast for 2025 remained unchanged at 2.9 percent. 

It predicts that world crude demand will reach 104.5 million bpd in 2024, supported by strong air travel demand, increased road mobility, and industrial, construction and agricultural activities in non-OECD countries.

It expects demand in OECD countries to expand by around 0.2 million bpd and in non-OECD economies by 2 million bpd this year.

The EIA revised its short-term energy outlook upwards, predicting that the average Brent price for this year will be $87.

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