LONDON: Oil rose to touch $108 a barrel yesterday after the International Energy Agency (IEA) raised its forecast for global oil demand this year, citing accelerating economic growth.
The West’s energy watchdog said world oil consumption would increase by 1.3 million barrels per day (bpd) this year, 50,000bpd higher than it previously forecast.
This means supply will be tight, even as US shale oil production reaches record highs, with commercial oil stocks in industrialised nations plummeting in November 2013 by 53.6 million barrels, the biggest monthly drop since 2011.
“Most OECD economies have by now largely exited the restraints of recession, with strong gains in some countries in the energy-intensive manufacturing and petrochemical sectors,” the IEA report said.
Brent crude was up $1.35 at $107.70 a barrel by 1527 GMT, after reaching the day’s high of $108 per barrel. It was heading for its highest close since December 31, and on track for its biggest daily gain in more than a month. US oil futures gained 63 cents from Friday’s close to $95 a barrel. There was no settlement on Monday on the New York Mercantile Exchange due to a US holiday.
Oil also received support from an increase in risk appetite across the market after the People’s Bank of China dumped more than 255bn yuan ($42bn) into the financial system, easing concerns about a credit crunch that could hamper growth in the world’s second-biggest economy.