Crude oil prices inched higher after starting the week with sharp losses, amid reports of rebounding Asian imports and a weaker dollar that should stimulate stronger demand.
At the time of writing Brent crude was trading at $70.05 per barrel, with West Texas Intermediate at $66.75 per barrel, as the U.S. Energy Information Administration made a considerable revision to its supply and demand outlook for this year and next, and the head of the International Energy Agency called for more investments in new oil and gas supply.
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Even an estimated U.S. crude oil inventory build, as reported by the American Petroleum Institute, did not offset the effect of the EIA’s report, which saw Brent crude prices rising to an average $75 per barrel in the second quarter on a tighter market. The EIA said, however, that supply will ramp up in the second half of the year, based on the assumption that OPEC+ will not waver from its latest decision to go ahead and add 138,000 bpd to collective production from April.
The head of the International Energy Agency, meanwhile, did a 180-degree turn in his rhetoric, calling for more investment in fresh oil and gas supply after years of preaching peak oil demand and how unnecessary new oil and gas supply is in a world shifting away from hydrocarbons altogether.
“I want to make it clear … there would be a need for investment, especially to address the decline in the existing fields,” Fatih Birol said at the CERAWeek energy conference, as quoted by Reuters. “There is a need for oil and gas upstream investments, full stop.”
On the geopolitical front, meanwhile, bearish events are in progress. The Ukraine just accepted a U.S. proposal for a 30-day ceasefire, which, if Russia accepts it, would make the lifting of U.S. sanctions on the country’s energy industry much more likely.
By Irina Slav for Oilprice.com
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