Oil Swings as Risk-On Mood Vies With Weaker IEA Demand Forecast
Oil fell to the lowest in more than 11 weeks after the International Energy Agency cut its forecast for demand growth this year, citing economic softness and mild weather in Europe.
(Bloomberg) -- Oil traded little changed as traders balanced broader risk-on sentiment with consumption concerns after the International Energy Agency slashed its demand forecast.
West Texas Intermediate fluctuated near $78 a barrel, swinging in a $2 range as markets searched for direction. Earlier, prices fell to the lowest intraday level since February before paring losses after US data showed some signs of market strength.
Gasoline and jet demand increased on a four-week seasonal average, while US stockpiles declined. Still, the data was not as strong as 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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