Oil prices on Thursday surged to an eight-month high above $73 a barrel after the western countries’ energy watchdog raised its forecast for global oil demand for the first time in almost a year.The International Energy Agency’s abrupt change, saying that the oil market was witnessing the “long-awaited emergence of improving fundamentals”, suggests that economic green shoots are starting to boost energy consumption. The IEA forecast global oil consumption would be 120,000 barrels a day higher than it had previously estimated – although it would still drop this year by 2.5m b/d. Global demand is put at 83.3m b/d this year, down 2.9 per cent from 2008.
The IEA cautioned that the revision “may only signal the bottoming out of the recession”, rather than “beginnings of a global economic recovery”. Barclays Capital analysts said: “It can hardly be argued that things are getting worse.”
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The market rallied on the bullish message, with West Texas Intermediate, the US benchmark, rising to an intraday high of $73.23 a barrel, more than double FebruaryÂ’s four-year low of $32.70 a barrel. Oil prices have risen 60 per cent this year, although they remain far below last yearÂ’s all-time high of almost $150.
Long-dated contracts, such as futures for delivery in December 2017, climbed above $90 a barrel, signalling investorsÂ’ bets that oil prices have further to run.