LONDON, Oct 13 (Reuters) – Oil prices steadied on Thursday, finding continued support for last week’s OPEC+ decision to cut supply, which the International Energy Agency warned could push the global economy into recession.
Brent crude was up 49 cents, or 0.5%, at $92.94 a barrel by 0833 GMT. U.S. West Texas Intermediate crude was up 37 cents, or 0.4%, at $87.64 a barrel.
Last week, the producer group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, raised prices when they agreed to cut supply by 2 million barrels per day (bpd).
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“The OPEC + … plan … has derailed the growth trajectory of oil supplies this year and throughout next year, resulting in higher price levels increasing market volatility and fueling energy security concerns,” the IEA said on Thursday.
The IEA cut its oil demand growth estimates to 1.9 million bpd this year and 470,000 bpd in 2023 to 1.7 million bpd.
This comes after OPEC on Wednesday cut its outlook for demand growth this year by 460,000 bpd to 2.64 million bpd, citing China’s COVID-19 containment measures and a resurgence of high inflation. It cut its 2023 oil demand forecast by 360,000 bpd to 2.34 million bpd.
“Prospects for sustained growth are rapidly deteriorating due to entrenched inflationary pressures, quantitative tightening, persistent hikes in borrowing costs, a strong dollar and Covid-related restrictions in China, the world’s second-largest economy,” PVM analyst Thomas Varga said.
Deteriorating demand for crude oil builds inventories. US crude stockpiles rose by around 7.1 million barrels in the week ended October 7, according to market sources citing API data.
The energy market is under pressure from the US dollar, which has rallied broadly against lower-yielding currencies such as the yen.
The Federal Reserve’s commitment to keep raising interest rates to prevent high inflation has pushed up yields, making the U.S. currency more attractive to foreign investors.
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Additional reporting by Jesslyn Lehr in Singapore; Editing by Emilia Sithole-Madaris
Our Standards: Thomson Reuters Trust Principles.
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