MW: Oil gains; traders weigh demand before supply data
IEA cuts demand outlook after OPEC raises it; US supply data on tap
By Myra P. Saefong and William L. Watts, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures gained Wednesday, taking in stride a marginal cut in the International Energy Agency’s demand-growth forecast a day after the Organization of the Petroleum Exporting Countries projected a rise.
Crude-oil futures for March delivery CLH3 -0.08% rose 24 cents, or 0.3%, to $97.76 a barrel on the New York Mercantile Exchange. London-traded March Brent crude-oil futures UK:LCOH3 -0.0084% added 5 cents to $118.71 a barrel.
The Paris-based International Energy Agency warned in its monthly report that expectations for growing demand in 2013 may be overly optimistic. The IEA questioned whether an apparent steep rise in Chinese demand at the end of last year could be sustained. See: IEA cautious about growth in global oil demand .
The IEA said it expected oil demand to grow by 840,000 barrels a day in 2013, down 90,000 barrels a day from its previous estimate. The cut comes after the International Monetary Fund last month lowered its projections for global economic growth.
Matthew Parry, senior oil-market analyst at the IEA, said the likely key conclusion from the report is the lower call on OPEC crude, which was cut by 100,000 barrels per day from last month’s report.
“This essentially states that the amount of oil that OPEC would need to produce to balance the market is now lower, than previously assumed, suggesting an easing in market pressures,” said Parry, in emailed comments. “A combination of stronger non-OPEC supply growth ... and weaker global demand ... are forecast to fuel this looser future.”
Strategists at VTB Capital in London said they expected market participants to briefly turn their attention Wednesday to U.S. fundamentals when the Energy Information Administration delivers its weekly U.S. petroleum inventory report.
“We expect another bearish report that could add some pressure to [West Texas Intermediate] prices,” the strategists wrote in a note. “Refinery-utilization rates are likely to contract further, potentially slipping below 84% of capacity, as producers continue to reduce runs during the seasonal turnaround period.”
Also, the blizzard that hit the northeastern U.S. last week may have slowed demand for products, they said.
Analysts polled by Platts expect data to show that crude stocks rose 2.5 million barrels for the week ended Feb. 8. They also forecast unchanged inventories for gasoline and a decline of 1.6 million barrels in distillate stockpiles.
Late Tuesday, the American Petroleum Institute reported unexpected declines in crude and gasoline supplies. See: API reports fall in crude, gasoline supplies.
Oil futures were buoyed Tuesday as OPEC lifted its 2013 oil-demand-growth forecast to 840,000 barrels a day, a daily rise of 80,000 barrels. See: OPEC warns of risks to U.S. production growth.
The U.S. EIA on Tuesday also raised its demand forecast and boosted its outlook for Brent crude oil and gasoline prices.
At last check, March gasoline RBH3 +0.49% was up 2 cents, or 0.7%, at $3.07 a gallon and March heating oil HOH3 -0.45% was down 1 cent, or 0.4%, at $3.23 a gallon. March natural gas NGH13 +1.30% added 4 cents, or 1.3%, to $3.27 per million British thermal units.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
William L. Watts is MarketWatch's European bureau chief, based in Frankfurt. Follow him on Twitter @wlwatts.
