Oil prices surge after IEA report shows stirring demand
NEW YORK: Oil prices powered Thursday to new eight-month highs after a key international agency reported signs of life in moribund demand among the advanced economies.New York’’s main futures contract, light sweet crude for delivery in July, settled at 72.68 dollars a barrel, a gain of 1.35 dollars from Wednesday’’s close. Earlier it had hit an intraday peak of 73.23 dollars, its highest level since October.In London, Brent North Sea crude for July delivery rose 99 cents to close at 71.79 dollars. Oil prices extended Wednesday’’s strong gains after the International Energy Agency (IEA) raised its global demand estimate for the first time in months. The latest IEA monthly projections appeared to reinforce the market’’s strong gains Wednesday on the back of a bullish US weekly oil report, showing a big drop in crude reserves. “It’’s part of this broad movement higher on the back of the realization that the likelihood for a big demand discontinuity is very limited,” said Constanza Jacazio at Barclays Capital.”Key reports have been released that show moderate upwards revision. It reflects a change in the trend after months of downwards revisions,” she added. In its June report, the IEA said it had revised its global oil demand forecast up by 120,000 barrels for 2009, “following stronger-than-expected” first-quarter data among the Organization for Economic Cooperation and Development’’s (OECD) 30 member countries.The IEA projected global oil demand of 83.3 million barrels a day (mbd) for 2009, up from 83.18 mbd in the May report. Compared with the prior year, the estimated global demand would be 2.5 mbd, or 2.9 percent, lower, against 2.6 mbd previously estimated. “These revisions do not necessarily imply economic recovery, but may reflect a slowing in previously sharp decline,” the IEA said. Traders also focused on China’’s import figures, which came in at 4.035 mbd, nearly touching the record high of 4.085 mbd set in March 2008 and up 5.5 percent from a year ago, the Barclays analyst noted. “Broader shift in sentiment, in terms of economic expectations, in terms of demand forecasts is the key element,” Jacazio said. The IEA, the energy-monitoring arm of the OECD, also slightly revised its estimate for OECD demand in 2009 to 45.2 million barrels per day, representing a decline of 2.3 million barrels per day, or 4.9 percent, from the preceding year.
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