Oil futures extended their climb Wednesday, boosted after a pipeline fire temporarily disrupted crude flows from Iraq to Turkey and the International Energy Agency raised its forecast for 2022 demand growth.
Officials said crude flows through the Kirkuk-Ceyhan pipeline resumed, after it was stopped on Tuesday due to a blast near the pipeline in southeastern Turkey, Reuters reported. Officials said the explosion was due to a falling power pylon, not an attack, the report said. The pipeline has a capacity of 450,000 barrels a day.
Oil futures surged following initial reports of the explosion, giving back some, but not all, of the gains after operations were resumed. Analysts said the reaction to the outage and its subsequent resolution underscores how sensitive the market is to supply concerns.
“The pattern of recent weeks is being repeated, in other words: news about supply outages pushes prices up significantly, yet prices do not drop back to their previous level once the problems have been resolved,” said Carsten Fritsch, analyst at Commerzbank, in a note.
West Texas Intermediate crude for February delivery
CLG22,
rose 62 cents, or 0.7%, to $86.05 a barrel on the New York Mercantile Exchange, after trading as high as $87.08. March WTI
CL00,
CLH22,
the most actively traded contract, was up 49 cents, or 0.6%, at $85.32 a barrel.
March Brent crude
BRN00,
BRNH22,
the global benchmark, was up 50 cents, or 0.6%, at $88.01 a barrel on ICE Futures Europe, after hitting a high of $89.05. Both WTI and Brent on Tuesday closed at their highest since Oct. 13, 2014.
On Wednesday, the Paris-based International Energy Agency forecast global oil demand to return to pre-pandemic levels this year. The IEA hiked its oil-demand growth forecast for the coming year by 200,000 barrels a day, to 3.3 million barrels a day. It also raised its demand growth forecast for 2021 by 200,000 barrels a day to 5.5 million barrels a day.
The Organization of the Petroleum Exporting Countries, in its monthly report on Tuesday, left its forecast for 2022 growth in oil demand unchanged at 4.2 million barrels a day, estimating total global consumption at 100.8 million barrels a day.
