Oil headed for its biggest weekly gain in four months on supply disruptions and speculation that the fuel shift will boost demand.
West Texas Intermediate fell below $94 a barrel in Asia, but was still up more than 5% this week. Six oil and gas fields in the Gulf of Mexico were shut down after a leak at a boost station in Louisiana shut down two pipelines. Pipelines are expected to resume operations on Friday, Shell Plc said.
The International Energy Agency has raised its forecast for the growth of global demand due to a sharp rise in natural gas prices and heat waves. Global consumption will rise by 2.1 million barrels per day this year, up 380,000 from the agency’s previous forecast. In addition, the IEA said that OPEC+ is unlikely to increase production in the coming months due to limited spare capacity.
Oil’s big weekly gain came after falling to a six-month low last week as investors worried about the prospect of slower economic growth and lower consumption. Prices also benefited in recent days from a brief shutdown of a pipeline that carries crude oil from Russia to Central Europe, as well as a weaker dollar after data showed a slowdown in U.S. inflation.
“Oil macro sentiment improved this week as concerns about U.S. inflation eased amid falling gasoline prices,” said Gui Chenxi, an analyst at CITIC Futures Co.
Prices:
- WTI for September delivery was down 0.5% at $93.91 a barrel on the New York Mercantile Exchange at 12:01 a.m. in Singapore.
- rent for October settlement fell by 0.4% to $99.17 per barrel on the ICE Futures Europe exchange.
While futures rallied this week, time spreads, which are often seen, narrowed, indicating a reduction in market rigidity. The Brent spot spread — the difference between the two nearest contracts for the global benchmark — stood at $1.27 a barrel on Friday, down from more than $3 a month ago.
Unlike the opinion of the IEA, the Organization of the Petroleum Exporting Countries had a more pessimistic tone. The global oil market is expected to hit a surplus this quarter, the group said in its monthly forecast on Thursday, cutting its forecasts for the amount of crude to be pumped.
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