Oil prices ticked upward Wednesday, driven by projections that U.S. production growth will maintain a steady pace through to 2025, easing worries about potential market glut. Brent crude futures climbed 0.5 percent to hit $78.97 a barrel, while U.S. West Texas Intermediate crude notched a 0.6 percent gain, reaching $73.72.
The U.S. Energy Information Administration (EIA) forecasts suggest the nation’s oil output won’t eclipse the high-water mark set in December 2023, over 13.3 million barrels per day—until February 2025. The agency also trimmed its growth outlook for 2024, reducing its expectation by 120,000 barrels per day to an increase of 170,000 bpd, marking a significant retreat from the prior year’s surge of 1.02 million bpd.
Market participants are keenly awaiting further data on U.S. oil inventories, expected to be disclosed later Wednesday. Analysts predict a 1.9 million barrel rise in crude stocks from the previous week, attributing the increase to production recovery post-cold snap and the onset of refinery maintenance activities.
Concerns also linger over geopolitical tensions in the Middle East, especially with recent attacks on shipping in the Red Sea impacting flows through the Suez Canal, a vital artery for nearly 12 percent of worldwide trade.
While the EIA projects crude oil prices may ascend to the mid-$80s per barrel in the near term, it also signals potential for price dips in the second quarter of 2024 as global oil inventories begin to swell. Nonetheless, the ongoing threat of supply disruptions in the Middle East could press prices higher than anticipated.
With the industry bracing for the EIA’s latest weekly petroleum status report, initial data from the American Petroleum Institute indicated a smaller-than-expected increase in crude oil inventories, with a 0.67 million barrel rise for the week ending February 2, against projections of a 2.13 million barrel uptick. This evolving landscape underscores the intricate balance between supply, geopolitical risks, and economic forecasts shaping oil market dynamics.
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