HOUSTON: Oil prices were broadly steady on Wednesday after three key forecasters predicted that global oil inventories would fall in the second half of 2024, but gains were capped by a surprise build in U.S. crude inventories.
Brent crude futures were up 13 cents, or about 0.16%, to $82.05 a barrel at 11:18 a.m. EDT (1518 GMT), with U.S. West Texas Intermediate (WTI) crude futures up by 6 cents, or roughly 0.08%, to $77.96.
Prices had eased more than 2% last week after OPEC and its allies said they would phase out output cuts starting from October.
U.S. crude stocks posted a surprise build last week, up by 3.7 million barrels to 459.7 million barrels, compared with expectations of a one million barrel draw, according to the Energy Information Administration (EIA) on Wednesday.
Gasoline stocks rose more than expected, up by 2.6 million barrels to 233.5 million barrels, the EIA said, compared with analysts’ expectations in a Reuters poll for a 900,000-barrel build.?
However, longer term, the EIA, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) this week updated their views on the global oil demand-supply balance for 2024, predicting declines in global oil inventories, said Tamas Varga of oil broker PVM.
Their reports imply limited downside for prices in the second half of the year, Varga added, with the IEA seeing a larger depletion than the other two.
Meanwhile, U.S. consumer price data, published on Wednesday, reinforced expectations of a Fed rate cut by September. The U.S. central bank’s policy announcement is due later in the day with no change in rates expected just yet.
“It will be interesting to see what (Fed Chairman Jerome) Powell says, I don’t think there is any doubt that they will leave rates where they are,” said Ben McMillan, a fund manager for commodities mutual fund, IDX advisors.
“I’m in the camp that there will be probably only one cut, and that it could be post-election, not necessarily in September,” McMillan said.
Higher borrowing costs tend to dampen economic growth, and could, by extension, limit oil demand.
Elsewhere, European Central Bank vice-president, Luis de Guindos said the ECB must move “very slowly” in reducing interest rates, because of huge uncertainty over the inflation outlook.
Forecasters united but divided
Although the IEA trimmed its 2024 oil demand growth forecast on Wednesday to just under 1 million barrels per day (bpd), citing sluggish consumption in developed countries, the numbers suggest it agrees with OPEC and the EIA that there will be stock draws in the second half of the year, PVM’s Varga said.
The IEA also predicted oil demand would plateau at 105.6 million bpd by 2029, and be well eclipsed by supply - a full 8 million bpd above projected demand - by 2030.
The IEA’s view for next year, and up to the 2030s, is bleak, noted Varga.
On Tuesday, the EIA raised its 2024 world oil demand growth forecast to 1.10 million bpd, while OPEC stuck with its 2024 forecast of 2.25 million bpd.