Oil Surges After the EIA Forecasts a Supply Deficit for 2024

On Thursday, oil prices passed the $80.00 resistance level after the Energy Information Administration (EIA) predicted a 2024 supply deficit.

The US West Texas Intermediate (WTI) petroleum futures for May delivery advanced 1.72% to $81.09 per barrel on March 14. Furthermore, analysts anticipate a 0.21% gain to $81.26 a barrel for a three-day winning streak in the coming session.

Simultaneously, Brent oil May futures climbed 1.65% to $85.42 a barrel, hitting a 5-month high. Nevertheless, industry watchers estimate a slight 0.14% slide to $84.62 per barrel on the following trading day.

WTI rose by 2.78% and Brent by 2.58% on Wednesday following Ukrainian drone strikes on Russian oil refineries. Moreover, Israeli Prime Minister Benjamin Netanyahu rejected calls for a ceasefire over Ramadan despite pressure from US President Joe Biden.

Meanwhile, the EIA reported a draw of 1.54 million barrels in the week ending March 08, defying the forecasted 0.90-million-barrel build. It followed an accumulation of 1.37 million barrels the week before, marking the first inventory shortfall in seven weeks.

Likewise, the American Petroleum Institute posted a reduction of 5.52 million barrels in crude oil inventories in the same period. It reversed the market consensus of a 0.40-million-barrel addition and the 0.42-million-barrel increase in the week ending March 01.

EIA Expects Global Oil Output to Plummet This Year

The March EIA Oil Market Report (OMR) predicted that global oil production would decrease by 0.87 million barrels per day (bpd) in the first quarter compared to Q4 2023. However, this year’s total yield will still expand by 0.10 million bpd relative to last year.

In contrast, the OMR sees global demand lifting by 1.70 million bpd in January-March compared to the preceding quarter. Furthermore, it estimates 2024 annual growth at 1.30 million bpd, slowing by 43.48% from 2.30 million bpd in 2023.

Lastly, the EIA report attributed the projected annual deficit primarily to the OPEC+ voluntary output cuts of 2.20 million bpd. In addition, the agency predicts several major refineries worldwide will temporarily shut down due to severe weather conditions.

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