Oil prices rose $2 on May 17 as optimism over oil demand and U.S. debt ceiling negotiations outweighed supply concerns.
Brent crude futures rose $2.13, or 2.8%, to $77.04 a barrel by 1:38 p.m. EDT (1838 GMT). West Texas Intermediate U.S. crude was up $2.07 cents or 2.9% to $72.03.
The International Energy Agency on May 16 predicted demand would outpace supply by 2 million barrels per day (MMbbl/d) in the second half of the year, with China making up 60% of oil demand growth in 2023.
"The IEA's assessment has added optimism to the market this morning," said Bob Yawger, director of energy futures at Mizuho. He added that crude prices were also bolstered by optimism over debt ceiling talks.
Debt ceiling negotiations have preoccupied market participants, who took heart from Republican House of Representatives Speaker Kevin McCarthy's May 17 vow to avoid what would be a catastrophic default.
The optimism outweighed a crude inventory increase of 5 million barrels in the week ended May 12 reported by the Energy Information Administration. Analysts polled by Reuters had expected a 900,000 barrel drop.
The crude inventory build added to concerns about U.S. growth after data showed retail sales rose 0.4% in April, short of estimates for an increase of 0.8%.
However, gasoline stocks drew down by 1.4 million barrels as the four-week gasoline product supplied - a proxy for demand - rose to its highest level since December 2021.
In China, April industrial output and retail sales growth undershot forecasts, suggesting the economy lost momentum at the beginning of the second quarter.
Markets are in a "wait-and-watch mode" over the outcome of the debt ceiling negotiations, said Vandana Hari, founder of oil market analysis provider Vanda Insights.
"A bunch of Chinese macro-economic data for April released on Tuesday confirmed the narrative of a patchy and slow recovery in the country and continue to weigh on oil market sentiment."
Recommended Reading
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.
Triangle Energy, JV Set to Drill in North Perth Basin
2024-04-18 - The Booth-1 prospect is planned to be the first well in the joint venture’s —Triangle Energy, Strike Energy and New Zealand Oil and Gas — upcoming drilling campaign.
EIG’s MidOcean Closes Purchase of 20% Stake in Peru LNG
2024-04-23 - MidOcean Energy’s deal for SK Earthon’s Peru LNG follows a March deal to purchase Tokyo Gas’ LNG interests in Australia.
Equinor Acquires Stake in Standard Lithium Smackover Projects
2024-05-08 - Equinor’s transaction, completed effective May 7, includes interests in Standard Lithium’s flagship South West Arkansas Project and East Texas properties.
Crescent Point Divests Non-core Saskatchewan Assets to Saturn Oil & Gas
2024-05-07 - Crescent Point Energy is divesting non-core assets to boost its portfolio for long-term sustainability and repay debt.