Oil prices continued to rise for a third day on Wednesday, after the U.S. Energy Information Administration (EIA) reported a smaller-than-expected increase in crude oil inventories. The EIA also revised down its forecast for U.S. oil production growth, fueling optimism that the global oil market may not be as oversupplied as previously thought.
The Brent crude futures price rose by 51 cents to $79.10 per barrel, while the West Texas Intermediate (WTI) crude futures price rose by 57 cents to $73.88 per barrel.
According to the latest data from the American Petroleum Institute (API), U.S. crude inventories were lower than expected. The API’s weekly report showed a decrease in crude stocks of 3.4 million barrels for the week ending November 18, compared to analysts’ expectations of a 1.7 million barrel drawdown.
The U.S. Energy Information Administration (EIA) has revised down its outlook for domestic oil production growth, projecting a much slower rate of increase than last year. The EIA’s Short-Term Energy Outlook report now predicts U.S. crude production will not reach December 2023’s record high of 13.1 million barrels per day until February 2025.
Haitong Futures analysts pointed out that the revised EIA report strengthens the argument that the oil market will achieve equilibrium in 2024. According to their analysis, oil prices are likely to remain in a relatively narrow range of $10 around the current price levels.
Meanwhile, the International Energy Agency (IEA) has projected that India will be the world’s largest driver of oil demand growth between 2023 and 2030, surpassing China. This shift in demand is attributed to a number of factors, including rapid economic growth and increasing oil consumption in India, as well as the slowing economy in China and other developed nations. The agency also noted that rising oil prices and energy security concerns are also contributing to this shift in oil demand.