Oil Price Rise after IEA Upgraded Demand & Slashed Supply Growth Forecasts

  • USOil
    (${instrument.percentChange}%)

USOIL Analysis

In today's monthly report, the International Energy Agency (IEA) raised its 2024 global demand growth forecast, anticipating an increase of 1.3 million barrels per day (mbpd), from +1.2 mbpd previously. Furthermore, the agency slashed its supply outlook, now projecting worldwide output to grow by 800,000 bpd this year (from +1.7 mbpd) [1], following the extension of the OPEC+ curbs.

The report comes amidst disruptions from the ongoing war in the Middle East, Ukrainian attacks on Russian refineries this week [2] and the first draw in US crude stockpiles in nearly two months. USOil rises as a result and runs its third straight profitable month, keeping 84.90 in the spotlight. However fresh catalyst would be needed for that and we remain cautious around bigger gains.

The International Energy Agency may have upgraded its demand outlook, but still forecasts a significant slowdown from 2023 (+2.3 mbpd) and expects non-OPEC+ supply growth to "eclipse" demand expansion "by some margin". The world's top importer meanwhile, China, continues to face economic headwinds and policymakers remain reluctant to deploy bold stimulus.

Adding to fundamental and macro headwinds, the Relative Strength Index points to overbought conditions technically and USOil has faltered above the $80 mark recently. This creates scope for a breach of the EMA200 (77.50) that would endanger the upside bias, but weakness below the daily Ichimoku cloud does not look easy under current conditions.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 14 Mar 2024 https://www.iea.org/reports/oil-market-report-march-2024

2

Retrieved 29 May 2024 https://edition.cnn.com/2024/03/13/europe/ukraine-russia-drone-strikes-putin-intl/index.html

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