Oil futures were little changed Thursday morning, struggling for direction as traders weighed the outlook for demand, as well as the threat to supply from strife in the Middle East.
West Texas Intermediate crude for February delivery
was off 1 cent at $72.55 a barrel on the New York Mercantile Exchange.
March Brent crude
the global benchmark, was down 21 cents, or 03%, at $77.67 a barrel on ICE Futures Europe.
The Paris-based International Energy Agency on Thursday projected growth in oil demand to ease to 1.2 million barrels a day in 2024 from 2.3 million barrels a day last year, taking total demand to an average of 103 million barrels a day. Demand growth for 2024 was previously estimated at 1.1 million barrels a day.
The Organization of the Petroleum Exporting Countries forecast in a monthly report Wednesday that global oil demand will grow by 2.2 million barrels per day this year, unchanged from its previous projection.
Oil traders have largely looked past the threat of a wider Middle East conflict even as attacks on shipping by Yemen-based Houthi militants, who are backed by Iran, has forced the rerouting of tankers and cargo ships.
Pakistan’s air force launched retaliatory airstrikes early Thursday on Iran allegedly targeting militant positions, an attack that killed at least seven people and further raised tensions between the neighboring nations. The strikes followed Iran’s attack Tuesday on Pakistani soil that killed two children in the southwestern Balochistan province.
A wider conflict that poses a direct threat to crude supplies from the Middle East remains a threat, but may need to materialize before market participants react, analysts said.
“Supply has been in focus but overall market is hesitant to step into O&G (oil and gas) given past disappointments and IEA report pointing to supply outside of OPEC+ growing faster than global demand,” said Will Atcheson, energy sector specialist at Jefferies, in a note. “We do note that OPEC’s monthly report did point to demand growth twice IEA estimates, which would create tight markets” in the second half of 2024.
The American Petroleum Institute late Tuesday reported that U.S. crude inventories rose by 483,000 barrels last week, according to a source citing the data. Official data from the Energy Information Administration is due Thursday morning.
Analysts surveyed by S&P Global Commodity Insights, on average, look for crude inventories to show a rise of 93,000 barrels. Gasoline inventories are seen up 3.6 million barrels to around 248.6 million barrels, which would be a one-year high. Distillate stocks are forecast to rise 1.9 million barrels to around 134.3 million barrels, which would be the highest in more than two years.
—The Associated Press contributed.