WASHINGTON (DTN) -- Crude and refined products futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange rallied in early trade Wednesday, lifting the U.S. crude benchmark above $61 per barrel (bbl) as upbeat demand projections from the International Energy Agency joined a larger-than-expected drawdown from U.S. commercial crude oil inventories to buoy market sentiment.
A weaker greenback, trading near a 91.650 four-week low Wednesday morning, along with falling Treasury yields lent further support.
In early trade, May West Texas Intermediate futures climbed 92 cents to trade just above $61 bbl and the June Brent contract on ICE rallied $1.04 at $64.68 bbl. NYMEX May ULSD futures advanced 3.15 cents or 1.7% to $1.8461 gallon and May RBOB futures added 0.81 cent to $1.9838 gallon.
In its latest Oil Market Report published Wednesday morning, the Paris-based energy watchdog revised higher its 2021 global oil demand forecast by 230,000 barrels per day (bpd) from March's projections, citing improving market fundamentals and "robust prompt indicators."
"The massive overhang in global oil inventories that built up during last year's COVID-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing," the IEA said.
The agency now sees global oil demand rising by 5.7 million bpd this year to 96.7 million bpd following an 8.7 million bpd year-on-year decline in 2020.
Wednesday morning's upbeat forecast follows similar projections from the Organization of the Petroleum Exporting Countries that pegged global oil consumption growth at 96.46 million bpd this year, revised up 100,000 bpd from its previous report while 5.95 million bpd higher than last year. Both IEA and OPEC expect robust demand growth in the second half of the year when major economies in the Western Hemisphere reach higher levels of immunization.
"The market changes dramatically in the latter half of this year as nearly 2 million bpd of extra supply may be required to meet expected demand growth -- even after factoring in the announced ramp-up of OPEC+ production," IEA said.
The latest hiccup in the vaccine rollout from Johnson & Johnson could delay those expectations by a few months, according to analysts, with the company halting exports of its single-dose vaccine to the European Union amid concern over rare blood clots developed by six patients post-jab with one patient dying and a second in intensive care. After a bumpy start to vaccination efforts, the European Commission lifted its outlook for the bloc's immunization targets based, in part, on 55 million J&J vaccine doses contracted in the second quarter. Markets will keep a close eye on any changes in vaccination rates in the United States and EU along with updated statements from health officials. As of Tuesday, the U.S. vaccination rate stood at 3.38 million doses a day, with close to 200 million doses having been administrated so far.
Separately, the American Petroleum Institute reported nationwide crude oil stocks during the week ended April 9 declined 3.608 million bbl versus an expected draw of 2.5 million bbl while stocks at the Cushing tank farm in Oklahoma increased 917,000 bbl last week. Gasoline stockpiles soared 5.565 million bbl, far surpassing calls for increase of 300,000 bbl in the week ended April 9, while distillate inventories slid 3.006 million bbl, missing estimates for a 1.1 million bbl build.
U.S. Energy Information Administration is scheduled to publish its weekly inventory report at 10:30 a.m. ET.
Liubov Georges can be reached at firstname.lastname@example.org