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Oil futures rose Thursday, boosted after the International Energy Agency underlined rising demand from power generators in the face of soaring prices for natural gas and coal.
“Oil is continuing its upward trend, driven by the global energy crunch and supply restraints from the world’s top producers,” said Lukman Otunuga, senior research analyst at FXTM, in a note.
Read: Energy crisis? What experts are saying as world faces historic energy-price crunch
West Texas Intermediate crude for November delivery
CL00,
CLX21,
rose 96 cents, or 1.2%, to $81.40 a barrel on the New York Mercantile Exchange. December Brent crude
BRN00,
BRNZ21,
the global benchmark, was up 97 cents, or 1.2%, to $84.15 a barrel on ICE Futures Europe.
In its closely watched monthly report, the Paris-based IEA raised its global oil-demand forecasts for this year and the next by 170,000 barrels a day and 210,000 barrels a day respectively, but added that the cumulative effect of the continuing energy crisis could be as large as 500,000 barrels a day from September through next year’s first quarter.
The IEA noted a “massive” switch to crude by power generators amid a shortage of natural gas, liquefied natural gas and coal supplies. Analysts have widely cited the phenomenon as a driver of the recent leg of the oil rally, which has propelled the U.S. benchmark to a nearly seven-year high and seen Brent trade near three-year highs.
Crude had stumbled in electronic trade late Wednesday after the American Petroleum Institute, according to sources, said that U.S. crude supplies rose by 5.2 million barrels for the week ended Oct. 8.
The API, which released its report a day later than usual because of Monday’s Columbus Day holiday, also reportedly showed inventory declines of 4.6 million barrels for gasoline and 2.7 million barrels for distillates. Crude stocks at the Cushing, Oklahoma delivery hub, however, edged down by 2.3 million barrels for the week, sources said.
More closely followed inventory data from the Energy Information Administration will be released Thursday. On average, the EIA is expected to show crude inventories down by 500,000 barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also calls for supply declines of 400,000 barrels for gasoline and 800,000 barrels for distillates.
If the EIA reports a crude figure similar to the API reading, “it would be the largest build since March,” noted Warren Patterson, head of commodities strategy at ING. “However, the market seems more focused on the fairly large draws seen in Cushing, as well as on the product side.”
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