Oil extends gains on IEA growth forecasts and as OPEC touts pact cutting output
SEOUL (Reuters) – Oil prices rose on Tuesday for a third straight session, underpinned by robust demand forecasts and as ministers from OPEC touted the strength of its agreement with global producers to cut output in order to bolster the market.
International benchmark Brent crude futures LCOc1 were at$65.61 per barrel at 0428 GMT, up 7 cents, or 0.11 percent.
US West Texas Intermediate (WTI) crude futures CLc1 were at $62.67 a barrel, up 10 cents, or 0.16 percent.
The International Energy Agency (IEA) said on Monday 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.”
Barkindo’s statements supporting the agreement and the benefits of keeping supply restrained, along with the IEA demand outlook, was supportive for prices.
“Oil was higher, however, as the prospects for increased demand and a little bit of jawboning at the CERAWeek conference helped,” said Greg Mckenna, chief market strategist at AxiTrader 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.
US 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 US Energy Department.
BMI Research said in a note to clients on Tuesday that it has 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.
Elsewhere, Libya’s El Sharara oil field resumed operations on Monday. The field, operated by Libya’s National Oil Corporation (NOC), was shut down on Sunday after a landowner closed a valve on a pipeline crossing his land.