Oil prices settled higher on Thursday after the International Energy Agency (IEA) joined producer group OPEC in forecasting strong growth in global oil demand and as cold winter weather disrupted U.S. crude output while the government reported a big weekly draw in crude inventories.
Oil traders also worried about geopolitical risks in the Middle East. Pakistan conducted strikes inside Iran, targeting Baluchi separatist militants, the country’s foreign ministry said, two days after Iranian strikes inside Pakistani territory.
Brent crude futures settled up $1.22, or 1.6%, to $79.10 a barrel, while U.S. West Texas Intermediate crude futures settled up $1.52, or 2%, $74.08.
The U.S. Energy Information Administration reported a larger-than-expected draw in crude inventories of 2.5 million barrels in the week ended Jan. 12.
“The fear of another large build of total inventories has not materialized, modestly supporting prices,” said Giovanni Staunovo, analyst at UBS.
The IEA monthly report said it expects oil demand to grow by 1.24 million barrels per day (bpd) in 2024, up 180,000 bpd from its previous projection.
On Wednesday, the Organization of the Petroleum Producing Countries (OPEC) said it expected demand growth of 2.25 million bpd this year, unchanged from its forecast in December. The producer group also said oil demand is expected to rise by a robust 1.85 million bpd in 2025 to 106.21 million bpd.
The IEA’s executive director, Fatih Birol, told the Reuters Global Markets Forum he expects oil markets to be “comfortable and balanced” this year despite Middle East tensions, rising supply and slowing demand growth.
In the United States, about 40% of oil output in North Dakota’s oil output remained shut-in due to extreme cold weather and operational challenges, the top oil-producing state’s pipeline authority said on Wednesday.
Last week, the United States produced another record of 13.3 million barrels per day of crude oil, the EIA data showed.
Oil’s range-bound trading in recent days reinforces the narrative that investors are shrugging off concern that tankers may be at risk from attacks in the Red Sea, said Ehsan Khoman, analyst at bank MUFG.
Oil tankers that had diverted away from the Red Sea have turned back and passed through the Bab al-Mandab Strait, ship-tracking data shows, though tensions in the region continued to disrupt global shipping and trade.
“The turmoil in the Mideast has kicked up freight and insurance rates appreciably but (has) not yet affected total global oil supply other than delaying shipments toward Europe and other regions,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.
Attacks by Yemen-based Houthi militants against ships in the Red Sea have forced many companies to divert cargoes around Africa, adding to journey times and costs. The United States on Wednesday conducted another round of strikes against Houthi targets in Yemen in retaliation for the attacks on shipping.
The Iran-aligned Houthis have said they are acting in solidarity with Palestinians during Israel’s Gaza war.