Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil inches up on strong demand forecasts, OPEC-led output cuts

Published 03/06/2018, 02:58 AM
Updated 03/06/2018, 02:58 AM
© Reuters. Employee pumps fuel into a customer's motorcycle at French oil giant Total's first gas station in Mexico City

© Reuters. Employee pumps fuel into a customer's motorcycle at French oil giant Total's first gas station in Mexico City

By Jane Chung

SEOUL (Reuters) - Oil futures rose on Tuesday for a third session, underpinned by robust demand forecasts and as ministers from OPEC touted the strength of its agreement to cut output to bolster prices.

International benchmark Brent crude futures (LCOc1) were at$65.67 per barrel at 0743 GMT, up 8 cents, or 0.12 percent.

U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $62.68 a barrel, up 11 cents, or 0.18 percent.

The International Energy Agency (IEA) said on Monday that global oil demand was expected to grow over the next five years, while output from producers in the Organization of the Petroleum Exporting Countries (OPEC) would rise at a much slower pace.

The IEA's comments on increased demand, made during the CERAWeek conference in Houston on Monday, preceded statements from OPEC Secretary General Mohammed Barkindo that called the supply cut agreement with global producers "as solid as the Rock of Gibraltar".

"Oil was higher ... as the prospects for increased demand and a little bit of jawboning at the CERAWeek conference helped," Greg Mckenna, chief market strategist at AxiTrader, said in a note.

To fill the gap between OPEC and global demand, the IEA said the United States would supply much of the oil demand as its shale oil production was set to surge.

U.S. crude production has risen to more than 10 million barrels per day (bpd), overtaking top exporter Saudi Arabia. Output hit a record 10.057 million bpd in November, according to the U.S. Department of Energy.

BMI Research said in a note to clients on Tuesday that it had revised its 2018 Brent crude price forecast upward to $67 a barrel due to "accelerated market rebalancing and strong sentiment-driven support".

"We maintain that firming global demand and weaker supply growth will support crude prices over 2018," the note added.

Meanwhile, Michael McCarthy, chief market strategist at CMC Markets, said traders were waiting for U.S. crude inventories data.

"Expectations are for a further build - with an estimate of a build of around 2-1/2 million barrels ... so if anything, that would expect to add pressure on oil prices," McCarthy said.

U.S. crude inventories were expected to rise by 3 million barrels in the week to March 2, marking a second straight week increase, according to a Reuters poll.

© Reuters. Employee pumps fuel into a customer's motorcycle at French oil giant Total's first gas station in Mexico City

Industry group the American Petroleum Institute (API) is set to release its inventory data at 4:30 p.m. EST (2130 GMT) on Tuesday, and the U.S. Energy Department's Energy Information Administration (EIA) is scheduled to report its data at 10:30 a.m. EST (1530 GMT) on Wednesday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.