WTI crude futures were up 1.1% and trading near their highest level since 2014. Record gas prices are boosting consumption of other fuels and could add about 500,000 barrels a day of oil use over the next six months, the IEA said.
Saudi Arabia’s energy minister meanwhile reiterated the need for producers to take a gradual, phased approach to supply hikes. He said the oil market will be balanced by the end of the year, but reiterated that OPEC and its allies will face a challenging 2022.
Crude’s rally in recent months has been underscored by wider gains in energy prices. Some analysts, including at Bank of America Corp., see potential for prices to reach $100 a barrel, though RBC Capital Markets cautioned that stockpiles will need to fall by 550 million barrels between now and June for that to happen.
“Risks for the oil market are clearly skewed to the upside in the coming weeks,” said Warren Patterson, head of commodities strategy at ING Groep NV. “The global balance continues to tighten, while the potential for further gas-to-oil switching suggests an even tighter market.”
RBC also said that longer-dated oil prices will continue to rally. Crude is in the early days of a multiyear structurally strong cycle, the bank’s analysts including Michael Tran and Helima Croft wrote in a note.
Meanwhile the American Petroleum Institute reported a mixed set of inventory figures. Nationwide crude stockpiles grew, but those at the key hub of Cushing, Oklahoma fell sharply, as did gasoline and distillate supplies.