FILE PHOTO: Workers hired by U.S. oil and gas company Apache Corp drill a horizontal well in the Wolfcamp Shale in west Texas Permian Basin near the town of Mertzon, Texas, U.S., October 29, 2013. REUTERS/Terry Wade/File Photo (Reuters)
Oil futures rose on Tuesday for a third session, underpinned by robust demand forecasts and as ministers from OPEC touted the strength of its agreement to cut output to bolster prices.
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International benchmark Brent crude futures were at$65.66 per barrel at 0619 GMT, up 12 cents, or 0.18 percent.
U.S. West Texas Intermediate (WTI) crude futures were at $62.72 a barrel, up 15 cents, or 0.24 percent.
The International Energy Agency (IEA) said on Monday that global oil demand was expected to grow over the next five years, while output from producers in the Organization of the Petroleum Exporting Countries (OPEC) would rise at a much slower pace.
The IEA’s comments on increased demand, made during the CERAWeek conference in Houston on Monday, preceded statements from OPEC Secretary General Mohammed Barkindo that called the supply cut agreement with global producers “as solid as the Rock of Gibraltar.”
“Oil was higher … as the prospects for increased demand and a little bit of jawboning at the CERAWeek conference helped,” Greg Mckenna, chief market strategist at AxiTrader, said in a note.
To fill the gap between OPEC and global demand, the IEA said the United States would supply much of the oil demand as its shale oil production was set to surge.
U.S. crude production has risen to more than 10 million barrels per day (bpd), overtaking top exporter Saudi Arabia. Output hit a record 10.057 million bpd in November, according to the U.S. Department of Energy.
BMI Research said in a note to clients on Tuesday that it had revised its 2018 Brent crude price forecast upward to $67 a barrel due to “accelerated market rebalancing and strong sentiment-driven support.”
“We maintain that firming global demand and weaker supply growth will support crude prices over 2018,” the note added.
Meanwhile, Michael McCarthy, chief market strategist at CMC Markets, said traders were waiting for U.S. crude inventories data. “Expectations are for a further build – with an estimate of a build of around 2-1/2 million barrels … so if anything, that would expect to add pressure on oil prices,” McCarthy said.
U.S. crude inventories were expected to rise by 3 million barrels in the week to March 2, marking a second straight week increase, according to a Reuters poll. Industry group the American Petroleum Institute (API) is set to release its inventory data at 4:30 p.m. EST (2130 GMT) on Tuesday, and the U.S. Energy Department’s Energy Information Administration (EIA) is scheduled to report its data at 10:30 a.m. EST (1530 GMT) on Wednesday.
(Reporting by Jane Chung Editing by Christian Schmollinger and Joseph Radford)
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