Brent crude oil futures reached $79.40 per barrel on Thursday, the highest since November 2014, as supplies tightened and demand remained strong.
ANZ bank said on Thursday that Brent was “now threatening to break through $80 per barrel … (as) geopolitical risks continue to support prices, (and) an unexpected fall in inventories in the U.S. got investors excited.” and that the falling U.S. inventories were “raising concerns of tight markets heading into the U.S. driving season,” during which demand typically rises.
U.S. bank Morgan Stanley said it had raised its Brent price forecast to $90 per barrel by 2020 due to a steady increase in demand.
Not all indicators pointed to a tighter market, however.
The International Energy Agency (IEA) said on Wednesday it had lowered its global oil demand growth forecast for 2018 from 1.5 million barrels per day (bpd) to 1.4 million bpd.
The IEA said global oil demand would average 99.2 million bpd in 2018, although U.S. bank Goldman Sachs said consumption would cross 100 million bpd “this summer”.
Although supplies currently only stand at 98 million bpd due to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), the IEA said “strong non-OPEC growth … will grow by 1.87 million bpd in 2018.”
Leading production increases is the United States, where crude output has soared by 27 percent in the last two years, to a record 10.72 million bpd, putting the United States within reach of top producer Russia’s 11 million bpd.