Oil Edges Higher, as IEA Hikes 2022 Demand Growth Forecast

Crude oil prices rose by over 1% on Thursday after the International Energy Agency raised its oil demand growth forecast for this year as soaring gas prices drive some consumers to switch to oil.

Brent crude futures gained $1.04, or 1.1%, to $98.44 a barrel by 0949 GMT, while U.S. West Texas Intermediate crude futures rose $1.03, or 1.1%, to $92.96.

US crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels.

“Natural gas and electricity prices have soared to new records, incentivising gas-to-oil switching in some countries,” the Paris-based agency said in its monthly oil report, in which it raised its outlook for 2022 demand by 380,000 barrels per day (bpd).

A rise in US oil inventories last week and the resumption of crude flows on a pipeline supplying central Europe capped further price gains, however.

US crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels.

Petrol or gasoline product supplied rose in the most recent week to 9.1 million barrels per day, though that figure still shows demand down 6% over the past four weeks compared with the year-ago period.

The premium for front-month WTI futures over barrels loading in six months’ time was pegged at $4.38 a barrel on Thursday, the lowest in four months, indicating easing tightness in prompt supplies.

The resumption of flows on the southern leg of the Russia-to-Europe Druzhba pipeline further calmed market worries over global supply.

Transneft, the state-owned oil pipeline monopoly of Russia reopened the southern leg of the Druzhba oil pipeline (TRNF p.MM). According to Transneft, Ukraine had been halting the supply of Russian oil through pipelines to portions of central Europe since the beginning of this month because Western sanctions prevented it from receiving transit payments from Moscow. In the meantime, physical oil prices around the world have started to decline in tandem with futures, reflecting waning concerns over supply disruptions caused by Russia and heightened concerns over a potential global economic slowdown.