Oil steadies as IEA turns more bullish on oil demand

By Ahmad Ghaddar

Crude oil tanker in Zhoushan

© Thomson Reuters
Crude oil tanker in Zhoushan

LONDON (Reuters) -Oil futures steadied on Tuesday as support from a higher global demand forecast from the International Energy Agency (IEA) was countered by weaker than expected Chinese economic data.


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Brent crude futures eased by 11 cents, or 0.2%, to $75.12 a barrel by 0922 GMT while U.S. West Texas Intermediate crude was down 12 cents, or 0.2%, at $70.99.

Both benchmarks rose more than 1% on Monday, reversing a three-session losing streak.

The IEA raised its forecast for global oil demand this year by 200,000 barrels per day (bpd) to a record 102 million bpd. It said China’s recovery after the lifting of COVID-19 curbs had surpassed expectations, with demand reaching a record 16 million bpd in March.

In another bullish factor, the U.S. Department of Energy, on Monday said it would buy 3 million barrels of crude oil for the Strategic Petroleum Reserve for delivery in August.

Data from China, meanwhile, showed that industrial output and retail sales growth undershot forecasts in April, suggesting the world’s No.2 economy lost momentum at the start of the second quarter.

However, an 18.9% rise in China’s oil refinery throughput in April from a year earlier to the second-highest on record helped to keep a floor under crude prices.

“The risks remain tilted to the downside amid a sluggish recovery in China, uncertainty around the US economy and banking system and the impact of much higher interest rates on demand,” said OANDA analyst Craig Erlam.

With refiners building stockpiles ahead of the summer travel season, May crude imports by China are moving towards 11 million bpd, versus 10.67 million bpd in April, Refinitiv Oil Research said.

China’s June refinery intake is expected to grow by 1.5% month on month, data compiled from Wood Mackenzie showed.

On the supply side, widespread blazes in Alberta, Canada, shuttered at least 319,000 barrels of oil equivalent per day (boepd), representing 3.7% of national production.

Global crude supplies could also tighten in the second half as the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+, implement additional output cuts.

Separately, U.S. oil output from the seven biggest shale basins is due to rise in June to its highest on record, data from the Energy Information Administration showed.

(Reporting by Ahmad GhaddarAdditional reporting by Yuka Obayashi in Tokyo and Trixie Yap in SingaporeEditing by David Goodman)