Oil remains within narrow trading range on Wednesday

Oil remained within a narrow trading range on Wednesday as the International Energy Agency (IEA) revised down its forecast for 2024 demand growth by 140,000 barrels per day, Bloomberg reported.

Brent futures edged closer to $83 a barrel, trading steadily on Wednesday, while WTI held above $78.

The IEA’s downward revision in demand growth was compounded by a 4 million barrel increase in crude stockpiles in the Amsterdam-Rotterdam-Antwerp region, Europe’s key oil trading hub.

On the other hand, crude inventories in the US recently dropped by 3.1 million barrels, and Rystad analysts anticipate robust global demand for gasoline and European jet fuel.

Crude futures have seen gains this year as OPEC+ restrained output to prevent oversupply and stabilize global prices.

Ahead of the June 1 meeting to decide on extending the output curbs, member nations are grappling with the issue of their pumping capacities, with several major exporters seeking upgrades to secure the right to increase crude production in 2025.

“Price will remain range bound between $80-$90 Brent through 2Q 24,”  wrote Macquarie analysts, including Vikas Dwivedi, in a report. Post-2Q, they anticipate a bearish turn in oil prices, partly due to softer-than-expected demand stemming from persistent inflation.

The IEA’s downward revision in growth forecast reflects a contraction in demand during the first quarter in affluent countries—sluggish industrial activity and a mild winter dampened gasoil consumption, particularly in Europe—coupled with an upward adjustment in estimates for 2023. Meanwhile, OPEC+ nations involved in the group’s recent round of oil output cuts exceeded their quotas last month.