- The IEA anticipates a growth of 1.24 million barrels per day (bpd) in oil demand for 2024.
- Geopolitical concerns in the Middle East intensified as Pakistan conducted strikes inside Iran.
- The number of Americans filing new claims for unemployment benefits dropped significantly.
On Thursday, oil prices rose as the International Energy Agency and the OPEC producer group predicted robust growth in global oil demand. At the same time, severe winter weather disrupted US crude output. Moreover, the government reported a significant weekly decrease in crude inventories. There was a larger-than-expected draw in crude inventories, totaling 2.5 million barrels for the week ending Jan. 12.
According to the IEA’s monthly report, it anticipates a growth of 1.24 million barrels per day in oil demand for 2024. This is an increase of 180,000 bpd from its previous projection. On Wednesday, OPEC maintained its forecast of 2.25 million bpd of demand growth this year. Moreover, it predicted a robust increase of 1.85 million bpd in 2025 to reach 106.21 million bpd.
The IEA’s executive director, Fatih Birol, expressed optimism about the oil markets, expecting them to be “comfortable and balanced” in 2024. This is despite Middle East tensions, rising supply, and slowing demand growth.
Meanwhile, geopolitical concerns in the Middle East intensified as Pakistan led strikes inside Iran. This occurred just two days after Iranian strikes within Pakistani territory.
However, according to Ehsan Khoman, MUFG analyst, recent range-bound oil trading suggests investors are not so concerned about Middle East tensions. Oil tankers initially avoiding the Red Sea are now passing through the Bab al-Mandab Strait. Nevertheless, ongoing regional disruptions continue to affect global shipping and trade.
Attacks in the Red Sea have forced companies to reroute cargoes around Africa, increasing journey times and costs.
US jobless claims (Source: Labor Department)
Meanwhile, the number of Americans filing new claims for unemployment benefits dropped to the lowest level in nearly 1 1/2 years last week, suggesting solid job growth in January. This unexpected decline in initial claims and strong retail sales growth in December paint an optimistic picture of the economy. It could discourage the Fed from starting interest rate cuts in March.
In the US, approximately 40% of North Dakota’s oil output remained shut down due to extreme cold weather and operational challenges. However, the US set a new record last week by producing 13.3 million barrels of crude oil daily, as the EIA reported.