DTN Oil Update
Oil Futures Climb on Tight Crude Oil Supply Outlook
HOUSTON (DTN) -- Oil futures settled higher on Friday, rebounding from a 2% decline in the previous trading session, after the International Energy Agency projected a tighter-than-expected crude oil market in the near term. However, gains were capped as the IEA also anticipated an even higher risk of oversupply later in the year, according to their latest monthly oil market report published this morning.
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The front-month NYMEX WTI futures contract for August delivery climbed by $2.03 to $68.60 bbl, while the front-month ICE Brent for September delivery advanced $1.89 to $70.53 bbl.
August RBOB gasoline futures rose $0.0389 to $2.1913 gallon, and the front-month ULSD futures contract rose by $0.0776 to $2.4611gallon.
The U.S. Dollar Index gained 0.203 points to 97.525.
Despite additional output from OPEC countries being scheduled for August, the oil futures market remained bullish to close the week, supported by the IEA's forecast of strong refining margins and a steep backwardation at the front end of crude oil futures forward curves, evidence of a market currently tighter-than-expected.
IEA saw surging global oil stocks in May and reported that preliminary data suggest the same for June, adding to oversupply concerns. However, the surge in crude inventories was mostly concentrated in China, where a new energy security policy is incentivizing stock builds.
The newest IEA report contained yet another downward revision to global oil demand growth forecasts. The agency now estimates 700,000 bpd of global demand growth this year and 720,000 bpd in 2026. Given OPEC's strategic shift and growing non-OPEC output, IEA estimates global supply to grow by 2.1 million bpd in 2025, leading to a global surplus of 700,000 bpd this year.
