Oil Holds Firm on OPEC Demand Forecast and US Fuel Stocks

Oil Holds Firm on OPEC Demand Forecast and US Fuel Stocks
Oil, miniatures of oil barrels, oil pump jack and U.S. dollar banknote are seen in this illustration taken on June 6, 2023. (Dado Ruvic/Reuters)

LONDON—Oil prices were little changed on Wednesday, holding on to Tuesday’s gains on a robust demand growth forecast from OPEC and a sharp decline in U.S. fuel stocks.

Brent crude futures rose 6 cents, or 0.07 percent, to $82.83 a barrel by 0953 GMT. U.S. West Texas Intermediate (WTI) crude futures were flat at $77.87.

Geopolitical factors were also partly responsible for gains of about 1 percent on Tuesday, with diplomatic deadlocks in the Middle East and Russia-Ukraine conflicts offsetting expectations of a deferred start to interest rate cuts in the United States.

“Currently events around Israel and Gaza, together with Ukraine’s war against Russia, weighs more on sentiment than disappointing U.S. inflation data,” said PVM analyst Tamas Varga.

The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Tuesday that global oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.

The 2024 forecast is higher than that of other forecasters, such as the International Energy Agency (IEA) and banks including Morgan Stanley. The IEA releases its own monthly oil report on Thursday.

OPEC’s projection of a “nearly unquenchable thirst for oil in 2024 and 2025” trumped the somewhat conservative views of others, Mr. Varga said.

U.S. gasoline and distillate fuel stockpiles plunged by 7.23 million barrels and 4.02 million barrels respectively in the week to Feb. 9, according to data from the American Petroleum Institute, both much larger declines than analysts expected.

At the same time, U.S. crude oil inventories rose by a much larger than expected 8.52 million barrels as refinery downtime cuts both crude consumption and fuel production.

Official inventory data from the U.S. Energy Information Administration is due at 1530 GMT.

By Robert Harvey