Oil prices rise on tight supply as IEA warns of global recession

LONDON, Oct 13 (Reuters) – Oil prices firmed on Thursday, benefiting from continued support from OPEC+’s decision last week to cut supplies, as the International Energy Agency warned that these cuts could plunge the global economy into recession.

Brent crude futures rose 49 cents, or 0.5%, to $92.94 a barrel at 0833 GMT. U.S. West Texas Intermediate crude rose 37 cents, or 0.4%, to $87.64 a barrel.

Last week, the producer group made up of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, pushed prices higher by agreeing to cut supply by 2 million barrels per year. day (bpd).

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“OPEC+’s plan…has derailed the oil supply growth trajectory through the end of this year and next, with the resulting higher price levels exacerbating market volatility. and heightening energy security concerns,” the IEA said Thursday.

The IEA has slightly revised down its oil demand growth estimates for this year to 1.9 million bpd and from 470,000 bpd in 2023 to 1.7 million bpd.

It comes after OPEC on Wednesday cut its outlook for demand growth this year from 460,000 bpd to 2.64 million bpd, citing the resurgence of China’s COVID-19 containment measures and high inflation. It lowered its 2023 oil demand forecast by 360,000 bpd to 2.34 million bpd.

“The outlook for sustained growth is rapidly deteriorating due to entrenched inflationary pressure, quantitative tightening, continued increases in borrowing costs, a strong dollar and COVID-related stresses in the world’s second-largest economy, China. China,” said PVM analyst Tamas Varga.

Deteriorating demand for crude oil contributes to the build-up of inventories. U.S. crude oil inventories rose about 7.1 million barrels for the week ended Oct. 7, according to market sources citing API data.

The energy market is also under pressure from the US dollar, which has largely rallied, including against low-yielding currencies like the yen.

The Federal Reserve’s commitment to continue raising interest rates to stem high inflation boosted returns, making the US currency more attractive to overseas investors.

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Additional reporting by Jeslyn Lerh in Singapore; Editing by Emelia Sithole-Matarise

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