At 03:24 GMT, Brent crude futures increased 2 cents to $94.12 per barrel, while U.S. West Texas Intermediate crude rose 18 cents, or 0.2%, to $88.66 per barrel.
“The oil price has priced in a worldwide recession, but even with flat global GDP, oil demand would remain pretty robust relative to ongoing supply concerns,” said Clifford Bennett, chief economist at ACY Securities.
Bennett stated that the market has been focusing on demand as of late, but has likely overestimated the decline in actual demand while overlooking the fact that supply can still be somewhat problematic.
The increased risk of a U.S. rail strike as a result of an ongoing labor dispute is also boosting the market. Three unions are negotiating a new contract that might impair oil and product rail shipments, which are essential.
The International Energy Agency (IEA) stated on Wednesday that it anticipates a large-scale transfer from natural gas to oil for heating purposes, predicting an average of 700,000 barrels per day (bpd) between October 2022 and March 2023 – double the amount from the previous year. This, together with the general anticipation of sluggish supply expansion, also contributed to the market’s rise.
The Energy Information Administration said that U.S. crude and distillate stocks increased more than anticipated during the previous week, indicating weaker fuel demand and capping oil prices.
According to analysts from Haitong Futures, expectations of additional U.S. interest rate hikes will continue to cloud the market and impede the return of oil prices.
According to sources familiar with plant operations, TotalEnergies SE reduced production at its 238,000 barrel-per-day (bpd) Port Arthur, Texas, refinery on Wednesday due to the anticipated downtime of two sulfur recovery units (SRUs).
