Oil rebounds despite IEA's trimmed forecast

Company News

by Glenn Dyer

Oil rebounded Friday even as the International Energy Agency trimmed its forecast rise in 2024 global oil demand.

The IEA’s report came as rising Middle East tensions combined to push prices higher after the brief halt in the gains midweek.

The IEA cut its projected rise in demand this year by 100,000 barrels a day to 1.2 million barrels and reduced its forecast for 2025 to 1.1 million barrels, stating that the post-pandemic demand surge had run its course.

Brent crude futures for June delivery traded 1% higher at $92.18 per barrel on Friday, while May West Texas Intermediate futures rose 1.2% to trade at a session high of $87.67 per barrel. Shares in Exxon Mobil hit an all-time intraday high of $123.74 as the oil rally lifted the energy sector. They eventually ended the week at $120.37, down 1% for the day and half a percent for the week as the rally ran out of steam.

WTI crude ultimately gained 64 cents, or 0.75%, settling at $85.66 a barrel, while Brent settled at $90.45, up 0.79% or 71 cents.

Driving the price higher were predictions that oil prices could hit $100 a barrel or more if Iran follows through on its threat of retribution against Israel for an attack on Iran’s embassy in Syria last week. Iran’s Supreme Leader Ayatollah Ali Khamenei has said the country will punish Israel for a missile attack on an Islamic Republic diplomatic building in Damascus, Syria, last week that killed seven Iranian military officials.

Oil prices rallied after that attack, though futures are down slightly this week as inflation data and higher US crude stockpiles have weighed on the market. Israel has warned Iran it will strike back against the Islamic Republic if Tehran retaliates. Iran did strike on Saturday with a massed drone assault.

Meanwhile, the little early 2024 boomlet in US oil rig use continued to fade last week. The oil and gas rig count fell by three to 617 in the week ending April 12, the lowest since November. US oil services group Baker Hughes said that puts the total rig count down 131, or 18%, from this time last year. Baker Hughes said oil rigs fell by two to 506 last week, while gas rigs decreased by one to 109, their lowest since January 2022. Oil rig numbers are now only 6 above their end-of-2023 level.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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