Oil prices surged on Thursday amid a frigid weather that slowed US production while the war in the Middle East persisted.
In the Asian afternoon session, Brent futures for March delivery jumped by 0.58% to $78.34. The US West Texas Intermediate (WTI) futures increased by 0.87% to $73.11 a barrel.
However, the increase in crude oil was capped by industry data revealing a sudden rise in US stockpiles. The severe cold weather in the country also caused a few output disruptions and seemed to have postponed travel, which is crucial to US fuel demand.
Additionally, the robust dollar impacted oil prices on weaker expectations for a March rate cut by the Federal Reserve (Fed) after optimistic retail sales data.
Wednesday saw significant intraday losses in crude prices, following a less-than-expected fourth-quarter gross domestic product data (GDP) growth of 5.2% from China.
Last year’s overall growth hardly exceeded the Chinese government’s 5% target, signaling a continued economic slowdown in the world’s biggest oil-importing nation.
Meanwhile, leading US oil producer North Dakota reported that its production dipped by 650,000 barrels per day (bpd) to 700,000 bpd, marking more than a 50% slide due to below-zero temperatures.
The Energy Information Administration (EIA) is due to release oil inventory data later in the day. Figures from the American Petroleum Institute (API) showed on Wednesday that domestic crude stockpiles increased by 480,000 barrels in the previous week.
OPEC Sees Strong Future Growth in Global Oil Demand
The Organization of the Petroleum Exporting Countries (OPEC) predicted fairly robust growth in global oil demand in the next two years.
OPEC’s monthly report stated that oil demand will likely rise by a significant 1.85 million bpd in 2025 to 106.21 million bpd. This year, the group saw demand climb by 2.25 million bpd, unchanged from its December estimate.
Despite the ongoing conflict in the Middle East, rising supply, and a slowing demand outlook, International Energy Agency (IEA) executive director Faith Birol expects the oil markets to remain steady throughout the year.
The Houthis’ attacks on ships in the Red Sea have led many companies to reroute their cargo around Africa, resulting in longer travel times and higher expenses.
