Oil prices rose on Thursday as OPEC forecast relatively strong growth in global oil demand over the next two years and the market eyed disrupted U.S. oil production amid a cold blast, as well as geopolitical tensions in the Middle East.
Brent crude futures gained 21 cents, or 0.3%, to $78.09 a barrel by 0505 GMT, while U.S. West Texas Intermediate crude futures rose 40 cents, or 0.6%, to $72.96.
OPEC, in a monthly report, said world oil demand is expected to rise by a robust 1.85 million barrels per day (bpd) in 2025 to 106.21 million bpd. For 2024, OPEC saw demand growth of 2.25 million bpd, unchanged from its forecast in December.
However, price gains were capped for now as the market considered mixed drivers.
“Brent crude prices remain broadly stuck in a range as they has been over the past two weeks, as market participants struggle to weigh mixed demand-supply dynamics with prevailing geopolitical tensions,” said Yeap Jun Rong, market strategist at IG.
An unexpected build in U.S. crude stockpiles and challenging recovery conditions in China continue to cast a shadow over the oil demand outlook, said Yeap, though the market remains wary of geopolitical developments.
In the latest tensions, Pakistan has conducted strikes inside Iran targeting Baluchi militants, a senior intelligence official told Reuters on Thursday, two days after Iran conducted strikes inside Pakistani territory.
Meanwhile, in top oil-producing U.S. state North Dakota, below-zero degrees Fahrenheit (minus 18 degrees Celsius) temperatures caused oil output to fall by 650,000 to 700,000 bpd, to less than half its typical output, the state said.
U.S. government data on oil inventories is due at 11 a.m. ET (1600 GMT) on Thursday. Domestic crude stockpiles rose last week by 480,000 barrels, according to market sources citing American Petroleum Institute figures on Wednesday.
The International Energy Agency (IEA) expects oil markets to be in a “comfortable and balanced position” this year despite Middle East tensions, amid rising supply and a slowing demand growth outlook, its executive director, Fatih Birol, told the Reuters Global Markets Forum on Wednesday.
Attacks by Yemen’s Houthis on ships in the Red Sea have forced many companies to divert cargoes around Africa, adding to journey times and costs. The U.S. on Wednesday conducted another round of strikes against Houthi targets in Yemen in retaliation for the attacks on shipping.
The Iran-aligned Houthis say they are acting in solidarity with Palestinians during Israel’s ongoing war with Gaza.
(Reporting by Stephanie Kelly in New York and Jeslyn Lerh in Singapore; Editing by Tom Hogue and Jamie Freed)