Yahoo Finance Oil Prices Surge as Suspected Tanker Attacks Eclipse OPEC Demand Forecast
Investing.com - Oil prices surged on Thursday as suspected attacks on tankers in the Gulf of Oman eclipsed the fact that OPEC cut its forecast for global demand and recognized “significant downside risks”.
New York-traded West Texas Intermediate crude futures jumped $2.06, or 4.0%, to $53.20 a barrel by 8:31 AM ET (12:31 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S. soared $2.42, or 4.0%, to $62.39.
The reports of suspected attacks on two tankers near the Strait of Hormuz, a major strategic waterway through which a fifth of global oil consumption passes from Middle East producers, sent prices soaring.
Coming after attacks on four tankers near the Persian Gulf last month, the news raised concerns over potential disruptions to oil flows. It wasn't clear who was responsible for the attacks. The tankers had been loaded in Saudi Arabia and the United Arab Emirates, according to reports.
Crude had plunged nearly 4% on Wednesday after a surprisingly large increase in U.S. oil inventories spurred further concerns over the state of demand in a weakening world economy.
Investing.com senior commodity analyst Barani Krishnan referred to the weekly report as “another woeful data sheet hardly reflective of the peak season for oil demand”.
Oil had its worst monthly performance of 2019 in May as traders shifted their focus from tightening supply (in the form of OPEC-led output cuts) to weakening demand, exacerbated by concerns that the ongoing trade dispute between the U.S. and China will dent the global economy.
In its monthly report released Thursday, OPEC cut its outlook for global demand growth this year from 1.21 million barrels per day (bpd) to 1.14 million bpd and noted that “significant downside risks from escalating trade disputes spilling over to global demand growth remain”.
OPEC joined the U.S. Energy Information Agency, which also lowered its global demand forecast earlier this week. The International Energy Agency will likely follow suit when it releases its own monthly report on Friday.
Ellen Wald, president of Transversal Consulting and Investing.com contributor, suggested that oil market’s obsession with a potential demand collapse may be overdone. She cited a report by BP that revealed that growth in energy consumption was nearly double the 10-year average rate.
“The BP (LON:BP) report should remind market watchers that even though organizations and banks are cutting their forecasts for oil demand growth in 2019, the world still needs energy in general - and more of it,” she said.
In other energy trading, gasoline futures rose 2.5% at $1.7289 a gallon by 8:34 AM ET (12:34 GMT), while heating oil traded up 3.0% at $1.8338 a gallon.
Lastly, natural gas futures fell 0.7% at $2.369 per million British thermal unit.
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