Oil prices ticked up on Thursday (March 15) due to a pickup in equity markets.
A positive demand outlook from the International Energy Agency (IEA) also supported prices.
That said, gains were limited by the Organization of the Petroleum Exporting Countries’ (OPEC) projection that supply will overtake demand this year.
OPEC stated that supply from non-members is likely to grow by 1.66 million barrels per day (bpd) in 2018, almost doubling the growth it predicted in November.
However, some industry experts believe that oil demand is in a good place.
Michael Loewen, a commodities strategist at Scotiabank in Toronto, told Bloomberg, “[w]e have strong demand, we have increasing exports, we have a lots of things going on. The only reason we are not up more is the more bearish OPEC oil market report.”
Also addressing demand was the IEA, which stated that global oil demand is expected to pick up this year. But supply is growing at a faster pace, which caused the inventory increase during Q1 2018.
“The negative aspect, and we continue to see this month-over-month, is everybody continues to revise their US supply forecasts higher,” said Nick Holmes, a director and investment analyst at Tortoise Capital in Leawood, Kansas.
The IEA believes non-OPEC supply, led by the US, will grow by 1.8 million bpd this year, while demand will grow by about 1.5 million bpd.
Between OPEC cuts and the rising US output, the cartel is losing market share. “In 2018, demand for OPEC crude is forecast at 32.6 million bpd, down by 0.2 million bpd from the previous assessment and 0.2 million bpd lower than a year earlier,” OPEC said.
As of 12:58 p.m. EST on Thursday, crude oil prices sat at $61.17 per barrel.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.