Crude oil prices rally on inventory draw, upbeat OPEC forecast

Crude oil prices began trading on a high note today, with the American Petroleum Institute (API) reporting a drop in stocks and OPEC reaffirming its demand growth prediction.

Brent crude rose beyond $82 per barrel in mid-morning Asian trade, while West Texas Intermediate (WTI) rocketed past $78.

OPEC reiterated its projection that global oil demand will rise by 2.25 million barrels per day this year, boosted by a stronger economic growth outlook.

The organisation suggested that global economic development could improve further in 2024.

Despite the lack of signs from the Federal Reserve, there is widespread expectation of rate decreases beginning in the summer, driven by inflation fears.

Inflation increased to 0.4% in February from 0.3% in January, although analysts believe inflationary pressures are easing.

Furthermore, the API’s announcement of inventory decreases in both crude oil and gasoline boosted prices and supported OPEC’s upbeat outlook on oil demand.

The Energy Information Administration (EIA) is slated to disclose inventory data later today. If the EIA also reports a drop, it will be the first decline following seven weeks of builds, according to a Bloomberg story.

On the other hand, the EIA’s Short-Term Energy Outlook forecasts that U.S. oil production may exceed prior estimates this year, putting pressure on prices due to higher non-OPEC output.

Furthermore, pessimistic signals are emerging from OPEC, with Iraq exceeding its production limitations for the second straight month in February.

Nonetheless, the EIA reduced its global oil output prediction for this year, providing justification for rising oil prices in the coming months.

According to EIA predictions, decreasing OPEC output in the coming quarter will push down global stocks, providing major support to prices and boosting Brent crude to $88 per barrel.