Brent futures added 1.2% in a fourth day of gains. The IEA cut its oil demand forecasts in a monthly report as the coronavirus continues to hit India, but also said surplus inventories are now just a small fraction of the levels seen when consumption collapsed last year.
In the U.S., retail gasoline prices topped $3 a gallon for the first time since 2014 as the ongoing outage on the Colonial Pipeline spurred panic-buying. The pipe’s operator said it will know late Wednesday whether it’s safe to restart the network.
Colonial’s halt is rippling through the market. While gasoline supplies are running out in some regions, processors are being forced to reduce run rates, cutting crude oil demand. In addition, refiners are booking ships to store growing fuel-product stockpiles.
Still, the impact of the shutdown on headline crude prices is muted for now. The market remains buoyed by prospects for recovering energy demand around the world and broader bets on global inflation. U.S. consumer prices rose by 0.8% last month, exceeding forecasts, official figures showed Wednesday.
“The outlook for demand remains fragile,” Toril Bosoni, head of the IEA’s oil markets and industry division, said in a Bloomberg television interview. But the agency is “expecting a very strong recovery in demand growth in the second half of the year.”
The IEA’s positive take on stockpiles followed a U.S. Energy Information Administration report on Tuesday that reduced its forecast for nationwide output through 2022.
There were also bullish figures from the American Petroleum Institute, which reported U.S. crude holdings sank by 2.53 million barrels last week, according to people familiar with the data ahead of government figures on Wednesday. Gasoline stockpiles rose by 5.64 million barrels, the API numbers showed.
Even if Colonial does manage to restart on Wednesday, it’ll take days to fully restore shipments, according to U.S. Energy Secretary Jennifer Granholm. As part of the administration’s effort to ease the growing burden on consumers, regulators have taken a first step toward waiving rules that bar foreign ships from hauling products from one U.S. port to another.