Oil futures lost ground Wednesday, after the International Energy Agency deemed a “supercycle” for the commodity unlikely in its latest forecasts, while traders looked ahead to official data on U.S. crude inventories after an industry group reported a fall in stocks.
West Texas Intermediate crude for April delivery fell 60 cents, or 0.9%, to $64.20 a barrel on the New York Mercantile Exchange. May Brent crude was down 78 cents, or 1.1%, at $67.61 a barrel on ICE Futures Europe.
The IEA bolstered its forecast for 2021 demand growth by 100,000 barrels a day, while cutting its outlook for U.S. supply. But despite extended and deepened production cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, and forecasts for supply shortfalls in some parts of the market, “oil inventories still look ample compared with historical levels despite a steady decline from a massive overhang that piled up during the second quarter of 2020,” the Paris-based organization said in its monthly report.
In a separate report on the medium term outlook, the IEA said the forecast for global oil demand has shifted lower, and could peak earlier than previously thought if an increased focus on clean-energy initiatives by governments translate into stronger policies and behavioral changes resulting from the pandemic become ingrained.
“We have seen some selling on the back of this report as traders believe that oil price this high is going to destabilize the supply,” by inviting a pickup in crude output, said Naeem Aslam, chief market analyst at AvaTrade.
On the supply front, the American Petroleum Institute reported late Tuesday that U.S. crude inventories fell by 1 million barrels for the week ended March 12, according to sources.
The data also reportedly showed gasoline stockpiles down by 926,000 barrels, while distillate inventories climbed by 904,000 barrels.
More closely followed inventory data from the Energy Information Administration will be released Wednesday. On average, the EIA is expected to show crude inventories up by 400,000 barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also shows expectations for inventory declines of 1.4 million barrels for gasoline and 900,000 barrels for distillates.