Supply concerns and demand growth expectations boost crude oil collectively higher and hit a new seven-year high

Financial circles reported on January 20 that a fire in an oil pipeline temporarily interrupted crude oil shipments from Iraq to Turkey, while the International Energy Agency raised its 2022 oil demand growth forecast to boost the crude oil futures collectively and hit a new high in more than seven years.

West Texas Intermediate crude for February deliveries on the New York Mercantile Exchange closed at $86.96 a barrel, up $1.53 or 1.8 percent, at one point as high as $87.92 a barrel during the session. The most active March WTI contract rose 97 cents to $85.80 a barrel and rose 1.1 percent. Brent crude oil rose 93 cents to $88.44 a barrel in March, the global benchmark for ICE European Futures Exchange, after hitting a high of $89.17. Under the near-month contract, both WTI and Brent crude settled at their highest levels since October 2014.

Officials said the Kirkuk-Ceyhan pipeline, which was interrupted on Tuesday by an explosion near a pipeline in southeastern Turkey, had resumed carrying crude oil, Reuters reported. Officials said the explosion was caused by a fall in the tower, not an attack, and the pipeline, which has a production capacity of 450,000 barrels per day.

Oil futures prices surged after initial reports of the explosion, bouncing some of their gains after resuming operations. Analysts said the market's reaction to the outage and its subsequent solutions underscored how sensitive the market is to supply concerns.

Commerzbank analyst Carsten Fritsch said in a note: "The pattern in recent weeks is repeating itself. In other words, the news of the supply disruption pushes the price up significantly, but once the problem is resolved, the price will not fall back to the previous level. ”

ActiveTrades senior analyst Ricardo Evangelista said in a daily briefing that the rocket attacks launched by Houthi militants in Yemen in the UAE earlier this week, triggering geopolitical instability and "growing vigilance against a possible Russian attack on Ukraine" were the reasons for the rise in oil prices.

Evangelista said: "Supply has been tight for some time because global demand continues to rebound and OPEC+ members have so far failed to reach the previous agreement to increase production. So the latest developments are an unwelcome addition, exacerbating pressures on an already strained market and creating room for oil prices to rise further. ”

Meanwhile, paris-based International Energy Agency predicted on Wednesday that global oil demand would return to pre-pandemic levels this year. The International Energy Agency raised its 2022 oil demand growth forecast by 200,000 b/d to 3.3 million b/d. The company also raised its 2021 demand growth forecast by 200,000 barrels to 5.5 million barrels per day.

In its monthly report released on Tuesday, the Organization of the Petroleum Exporting Countries maintained its forecast for global oil demand growth in 2022 unchanged at 4.2 million barrels per day and estimated total global oil consumption at 108 million barrels per day. The weekly U.S. oil supply data released by the U.S. Energy Information Administration will be postponed to Thursday, as Monday is a Martin Luther King Jr. holiday, a day later than usual.

According to a survey conducted by S&P Global Platts Energy News, analysts expect the average U.S. domestic crude inventories to fall by 700,000 barrels in the week ended Jan. 14. They also expect gasoline stocks to increase by 2.4 million barrels, but distillate supplies are expected to decrease by 1.1 million barrels.

Among other energy products traded on the New York Mercantile Exchange, gasoline rose 1 percent to $2.457 a gallon in February and heating oil rose 0.7 percent to $2.692 a gallon in February. Natural gas settled at $4.031/MILLION BTU in February.

This article originated from the financial world