Oil prices edged higher in choppy trade, after the International Energy Agency said global oil demand is expected to pick up this year, but warned supply is growing at a faster pace.
Prices notched their second consecutive day of gains, as West Texas Intermediate (WTI) crude futures rose 23 cents to settle at $US61.19 a barrel, a 0.4 per cent gain. Brent crude futures rose 23 cents to settle at $US65.12 a barrel.
Rising global oil demand, along with supply constraints from the Organization of the Petroleum Exporting Countries, has helped keep oil above $US60 a barrel.
The IEA said global crude demand would pick up this year, which was ‘reassuring’ to investors, said Phillip Streible, senior market strategist at RJO Futures in Chicago.
However, the IEA also noted rising supply, limiting crude gains. The IEA believes non-OPEC supply, led by the United States, will grow by 1.8 million bpd this year, while demand will grow by about 1.5 million bpd.
The relentless climb in US crude output has loomed over markets, as production hit another record last week at 10.38 million bpd.
OPEC on Wednesday raised its forecast for non-member oil supply this year to almost double the growth predicted four months ago.
OPEC and other producers led by Russia began cutting supply in January 2017 to erase a global crude glut that had built up since 2014. This has been somewhat offset by surging US crude production.
Prices bounced around after the United States announced new sanctions against Russian individuals and groups, including Moscow’s intelligence services and a Russian propaganda organisation.
‘The rising tensions between the West and Russia raise the potential for reduced trade flows and economic activity, which would diminish energy demand growth,’ said John Kilduff, partner at investment manager Again Capital in New York.
Prices were supported in the morning by a pickup on Wall Street, but US stocks retreated throughout the day. The Dow Jones Industrial Average was still up about 0.5 per cent, but the S&P 500 edged lower.
Recently, crude futures have moved in sync with equities.