[ad_1]
By David Gaffen
NEW YORK (Reuters) -Oil rose about 2% on Wednesday, rebounding from the previous day’s lows, as an international energy watchdog expects an increase in gas-to-oil switching due to high prices this winter, even though the outlook for demand remains gloomy.
Brent crude futures rose by $1.86 a barrel, or 2%, to $95.03 by 11:58 a.m. EDT (1558 GMT). U.S. West Texas Intermediate crude gained $2.06, or 2.4%, to $89.37.
The International Energy Agency (IEA) expects the deepening economic slowdown and a faltering Chinese economy to cause global oil demand to grind to a halt in the fourth quarter of the year.
However, the IEA also said it expects widespread switching from gas to oil for heating purposes, saying it will average 700,000 barrels per day (bpd) in October 2022 to March 2023 – double the level of a year ago. That, along with overall expectations for weak supply growth, helped boost the market.
Global observed inventories fell by 25.6 million barrels in July, the IEA said.
U.S. inventories rose last week, once again boosted by the ongoing releases from the Strategic Petroleum Reserve (SPR), latest government data showed. Commercial stocks rose by 2.4 million barrels as 8.4 million barrels were released from the SPR, part of a program scheduled to end next month. [EIA/S]
“The crude number suggests that once we wind down the clock on the Strategic Petroleum Reserve release, we’re going to see substantial drawdowns in inventories so that’s keeping oil high,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday said global oil demand in 2022 and 2023 will come in stronger than expected, citing signs that major economies are faring better than expected despite challenges such as surging inflation.
The market had earlier traded lower on demand concerns as global central banks continue to raise interest rates to curb inflation.
The European Central Bank’s (ECB) chief economist, Philip Lane, repeated the bank’s pledge to continue raising interest rates with its focus on inflation.
Higher energy prices remain a “dominant driving force of inflation” in the euro zone, Lane said.
A hotter than expected U.S. inflation report on Tuesday also dashed hopes the Federal Reserve could scale back its rate policy tightening in the coming months.
Fed officials are set to meet next Tuesday and Wednesday, with inflation way above the U.S. central bank’s 2% target.
(Reporting by David Gaffen; Additional reporting by Stephanie Kelly and Rowena Edwards; Editing by Marguerita Choy and David Gregorio)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
[ad_2]
Source link
