The IEA sees demand increasing over the next five years: File Image/Pixabay
It may be just a one-day wonder, but the minority notion from the analytical community that demand for crude is as healthy as ever was said to be one of the main reasons crude prices on Monday rose by over 1 percent.
In addition, assurances that the Organization of the Petroleum Exporting Countries (OPEC) would continue its output cuts into the summer caused Brent to climb 84 cents, or 1.28 percent, to settle at $66.58 per barrel; West Texas Intermediate rose 72 cents, or 1.28 percent, to settle at $56.79 per barrel.
Bank of America Merrill Lynch said despite economic headwinds "we still see Brent prices averaging $70 per barrel this year and expect WTI to lag, averaging $59 per barrel in 2019" thanks partly to strong demand for marine diesel as part of impending new fuel rules imposed by the International Maritime Organization.
Unnamed Saudi official
Saudi Arabia is demonstrating extraordinary commitment to accelerating market rebalancing
The International Energy Agency is another organization that thinks demand is exceedingly healthy: on Monday its five-year outlook declared it "continues to see no peak in oil demand, as petrochemicals and jet fuel remain the key drivers of growth, particularly in the United States and Asia, more than offsetting a slowdown in gasoline due to efficiency gains and electric cars."
For the record, the IEA also forecast that the U.S. will drive global oil supply growth over the next five years, adding another 4 million barrels per day (bpd) to current output, and "By the end of the forecast (2024), oil exports from the United States will overtake Russia and close in on Saudi Arabia, bringing greater diversity of supply.
Other factors weighed heavily in crude's favour on Monday despite being calamitous in their own right, such as Venezuela on Monday declaring a "state of alarm" over a five-day power blackout that has crippled the country's oil exports and left millions of citizens scrambling to find food and water.
As for OPEC continuing its cuts, this message was delivered by Khalid al-Falih, energy minister for Saudi Arabia, who told media it would be too early to change the initiative before the cartel's meeting in June.
An unnamed official for the kingdom also helped calm fears of oversupply by telling media on Monday that it plans to cut its crude oil exports in April to below 7 million bpd, while keeping its output well below 10 million bpd.
The official said, "Saudi Arabia is demonstrating extraordinary commitment to accelerating market rebalancing."