Oil prices rise on expectations of lower global inventories

(MENAFN) Oil prices experienced an uptick on Wednesday, buoyed by forecasts predicting a decrease in global oil inventories during the second half of 2024. By 12:19 GMT, Brent crude futures had risen by 88 cents, or 1.1 percent, reaching usd82.80 per barrel. Similarly, US West Texas Intermediate crude futures saw an increase of 96 cents, or approximately 1.2 percent, to usd78.86 per barrel. Earlier in the session, both crude benchmarks had surged by a dollar or more.

The upward movement in oil prices follows updates from major energy authorities, including the International Energy Agency (IEA), the US Energy Information Administration (EIA), and the Organization of the Petroleum Exporting Countries (OPEC). These organizations released revised forecasts for the global oil supply-demand balance in 2024, projecting a decline in global oil inventories.

Tamas Varga, an analyst at oil brokerage firm BVM, noted in a statement that the reports from these agencies collectively suggest limited downward pressure on oil prices for the latter half of the year. This expectation is rooted in the anticipated reduction in global oil inventories. Supporting this outlook, recent sector data revealed a more significant than expected drop in US crude inventories last week, reinforcing the projections of tighter supply.

Despite the IEA's downward revision of its oil demand growth forecast for 2024 to less than one million barrels per day, citing weak consumption in developed countries, the agency's numbers still align with the EIA and OPEC's predictions. All three institutions foresee a drawdown in oil inventories in the second half of the year, indicating a consensus that supports the current rise in oil prices. 

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