Oil prices ended higher Thursday for a second straight session, buoyed by signs of growing global crude demand, but concerns surrounding surging U.S. shale production kept gains in check.
On the New York Mercantile Exchange, April West Texas Intermediate futures
tacked on 23 cents, or 0.4%, to settle at $61.19 a barrel. It gained roughly the same amount Wednesday, but has lost about 1.4% week to date. May Brent crude
the global benchmark, added 23 cents, or 0.4%, to $65.12 a barrel on the ICE Futures Europe exchange.
In its closely watched monthly oil-market report issued Thursday, the International Energy Agency said global oil demand should grow by 1.5 million barrels a day, to average 99.3 million barrels a day in 2018. The estimate was an upward revision of 90,000 barrels a day compared with last months report.
Robust demand should help offset burgeoning U.S. shale oil production, largely keeping the oil market balanced this year, according to the agency.
But some market observers cautioned that relentless supply growth, mainly out of the U.S., still poses a risk to the market rebalancing that has been under way for the past year.
The oil market is more fragile than it seems, said Norbert Ruecker, head of macro and commodity research at Julius Baer. Profit-taking risks still loom large [and] strong output growth challenges the market tightening narrative, he argued.
Nitesh Shah, commodities strategist at ETF Securities, said he was skeptical demand could grow as fast as the IEA predicts, estimating demand growth this year would be closer to 1.2 million barrels a day.
We need very strong [demand] growth to absorb the supply thats coming out of the U.S., Shah said.
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The IEA report comes a day after the Organization of the Petroleum Exporting Countries raised its forecast for U.S. shale production. In its own monthly market report, OPEC said it now expects U.S. shale production to average 5.72 million barrels a day in 2018, a month-on-month upward revision of 130,000 barrels a day.
Such an ominous forecast does not bode well for the oil rebalancing, according to analysts at brokerage PVM Oil Associates Ltd.
OPEC and 10 producers outside the oil cartel, including Russia, have been holding back crude output by 1.8 million barrels a day since the start of last year, part of an effort to rein a supply glut and prop up prices.
Data Wednesday from the Energy Information Administration revealed a larger-than-expected rise in U.S. crude supplies of 5 million barrels for last week. Stocks at storage hub Cushing, Okla. climbed to 28.5 million barrels from roughly 28.2 million a week earlier, breaking a trend of weekly declines so far this year.
Between the large build in crude supplies and the rise in stocks at Cushing, and another increase in U.S. crude production, we feel any rallies will and should be sold into, said Tariq Zahir, managing member of Tyche Capital Advisors.
Among refined products traded on Nymex, April gasoline
ended little changed at $1.925 a gallon. April heating oil
rose 0.3% to $1.893 a gallon.
Natural-gas futures, meanwhile, settled lower after the EIA on Thursday reported that domestic supplies of natural gas fell by 93 billion cubic feet for the week ended March 9. Analysts surveyed by S&P Global Platts had forecast a decrease of 100 billion, while the five-year average withdrawal is 97 billion.
April natural gas
finished at $2.681 per million British thermal units, down 1.8%.
Sarah McFarlane contributed to this article