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Oil Rises as Risk-On Mood Vies With Weaker IEA Demand Forecast

Jordan Fitzgerald and Julia Fanzeres
·1 min read

(Bloomberg) -- Oil edged higher as traders balanced broader risk-on sentiment with concerns about consumption after the International Energy Agency slashed its demand forecast.

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West Texas Intermediate rose 0.8% to settle near $79 a barrel, after swinging in a roughly $2 range as markets searched for direction. Earlier, prices fell to the lowest intraday level since February before US data showed some signs of market strength.

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Gasoline and jet fuel demand increased on a four-week seasonal average, while US stockpiles declined. Still, the data wasn’t as strong as some traders anticipated ahead of the summer driving season.

Meanwhile, the IEA’s 140,000 barrel-a-day cut to its growth forecast reflects a first-quarter demand contraction in rich countries, combined with an upward revision to estimates for 2023. Other analysts at Rystad Energy A/S expect strong global demand for gasoline and European jet fuel.

Crude futures are still up this year as OPEC+ curtailed output to prevent a glut. In the run-up to deciding whether to extend the curbs at a June 1 meeting, members are grappling with the thorny issue of how much oil they are capable of pumping — several major exporters are seeking to have their levels upgraded, with a view to securing the right to pump more crude in 2025.

OPEC+ nations participating in the group’s most recent round of oil output cuts exceeded their quotas last month.

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