Oil holds near one-month highs as demand forecasts raised

TOKYO (Reuters) – Oil prices were lower on Thursday though holding near one-month highs after futures jumped in the previous as the International Energy Agency (IEA) and others upgraded forecasts for oil demand as major economies recover from the pandemic.

FILE PHOTO: The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

Brent crude was down by 21 cents, or 0.3%, at $66.37 a barrel by 0129 GMT, after gaining 4.6% on Wednesday and closing at the highest since March 17.

U.S. West Texas Intermediate futures dropped 25 cents, or 0.4%, to $62.9 a barrel, having risen 4.9% in the previous session.

U.S. crude inventories were down by 5.9 million barrels last week, the Energy Information Administration (EIA) said on Wednesday, more than double analysts’ expectations for a 2.9 million-barrel decline. East Coast crude stocks hit a record low. [EIA/S]

“We see robust stock draws even after factoring in bearish risks as refinery runs are set to rise sharply in the coming months,” Citi Research analysts said in a note.

Gasoline supplied to the market last week, an indicator of U.S. consumption of the fuel, increased to 8.9 million barrels per day (bpd), the highest since August, the EIA report said.

Global oil demand and supply are set to be rebalanced in the second half of this year after the evaporation of demand in 2020 as the COVID-19 pandemic raged, according to the IEA’s monthly report.

Producers may then need to pump a further 2 million bpd to meet the demand.

The Organization of the Petroleum Exporting Countries (OPEC), which has been withholding supply in tandem with other producers including Russia, this week raised its forecast for global oil demand this year.

OPEC expects demand to rise by 70,000 bpd from last month’s forecast and global demand is likely to rise by 5.95 million bpd in 2021, it said.

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