Oil futures ended higher on Thursday, with U.S. and global prices back on track to score gains for the week, as supply uncertainty tied to the Middle East helped to offset pressure from rising U.S. crude inventories and production.
The International Energy Agency, meanwhile, stuck to its forecast for a sharp slowdown in oil-demand growth this year.
Price moves
-
West Texas Intermediate crude
CL00,
-0.68%
for March delivery
CL.1,
-0.68% CLH24
rose $1.39, or 1.8%, to settle at $78.03 a barrel on the New York Mercantile Exchange, after losing 1.6% on Wednesday. Prices for the contract are trading 1.5% higher for the week so far. -
April Brent crude
BRN00,
-0.21% BRNJ24,
-0.24% ,
the global benchmark, climbed $1.26, or 1.5%, to $82.86 a barrel on ICE Futures Europe, up 0.8% this week to date. -
March gasoline
RBH24,
-3.33%
rose nearly 0.1% to $2.32 a gallon, while March heating oil
HOH24,
-3.47%
climbed 0.5% to $2.82 a gallon. -
Natural gas for March delivery
NGH24
settled at $1.58 per million British thermal units, down 1.7%, for another finish at its lowest level since June 2020.
Market drivers
Oil prices “remain very volatile, and last week’s unexpected and substantial inventory build,” reported by the U.S. Energy Information Administration on Wednesday, further added to that, said Craig Erlam, senior market analyst at OANDA.
“It’s understandable why oil prices are so volatile,” he said. “There’s tremendous uncertainty around the Middle East, the economy and interest rates, which is generating these large moves.”
There has been “more of an upside bias of late” in oil prices, but broadly speaking the price “remains at reasonable levels that won’t be a concern from an inflationary standpoint,” said Erlam.
WTI snapped a seven-day winning streak Wednesday after the EIA reported that U.S. crude inventories rose by 12 million barrels for the week that ended Feb. 9.
The EIA data sent crude prices lower, but “with no breakthrough in cease-fire talks in the Middle East and with two OPEC+ members — Kazakhstan and Iraq — saying that they will address any excess output above the agreed voluntary cuts, any declines are likely to stay limited,” said Charalampos Pissouros, investment analyst at XM, in a note.
Iraq and Kazakhstan promised to comply with OPEC+ oil-production targets after failing to fully comply with output cuts last month, news reports said.
The Paris-based IEA on Thursday left its forecast for oil-demand growth this year unchanged at 1.2 million barrels a day, down from 2.3 million barrels a day in 2023, citing slower economic growth. Total demand is expected to average 103 million barrels a day.
“Nobody believed IEA’s downbeat forecast, as traders cling to OPEC’s report released earlier this week that painted a much rosier picture” for demand, said Manish Raj, managing director at Velandera Energy Partners. OPEC’s total-demand forecast stands at 104.4 million barrels a day.
“There’s no shortage of naysayers, and yet traders see a profit opportunity while demand remains robust,” he said. “It is hard for oil analysts to make a case for shorting oil, when the broad equity market is so positive and the Middle East tension refuses to give up.”
“‘It is hard for oil analysts to make a case for shorting oil, when the broad equity market is so positive and the Middle-East tension refuses to give up.’”
In the U.S., natural-gas futures marked another finish at their lowest level since June 2020, following a smaller-than-expected weekly decline in domestic supplies.
The EIA on Thursday reported that domestic natural-gas supplies in storage declined by 49 billion cubic feet for the week ended Feb. 9, less than the average decline of 71 billion cubic feet forecast by analysts polled by S&P Global Commodity Insights.
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