Oil up 2% on likely rise in consumption

IEA expects increased winter switch from gas to oil

NEW YORK:

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 $1.86 a barrel, or 2%, to $95.03 by 1558 GMT. US West Texas Intermediate crude gained $2.06, or 2.4%, to $89.37 a barrel.

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. Globally observed inventories fell by 25.6 million barrels in July, the IEA said.

US 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 programme scheduled to end next month.

Published in The Express Tribune, September 15^th, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.