Oil Futures Settle Sharply Higher As IEA Raises Oil Demand Forecast

Despite data showing an increase in U.S. crude inventories last week, crude oil prices climbed higher on Wednesday, lifted by an upward revision in oil demand forecast by the International Energy Agency (IEA).

Supply concerns due to the shutdown of the Keystone pipeline following a massive leak of over 14,000 barrels of oil in Kansas last week also contributed to the increase in oil prices.

It is still not yet known how long it will take to clean up and restart the pipeline.

West Texas Intermediate Crude oil futures for January ended higher by $1.89 or about 2.5% at $77.28 a barrel.

Brent crude futures were up $2.10 or 2.6% at $82.78 a barrel a little while ago.

In its December report, the IEA raised its forecast for oil demand growth in 2023 to 1.7 million barrels a day. Meanwhile, OPEC expects global oil demand to be 2.2 million barrels per day in 2023.

Data from the Energy Information Administration showed crude inventories rose by 10.231 million barrels last week versus expectations for a draw of 3.595 million barrels.

Gasoline inventories increased by 4.496 million barrels compared to forecasts for an increase of 2.714 million barrels. 

Distillate stockpiles also rose by 1.364 million barrels last week, compared with expectations for a build of 2.517 million barrels.

Data released by the American Petroleum Institute late Tuesday showed crude oil inventories in the U.S. rose by 7.819 million barrels in the week ended December 9 versus expectations for a decline of 3.913 million barrels.

After raising interest rates by three-quarters of a percentage point at four consecutive meetings, the Federal Reserve today slowed the pace of rate increases but still signaled further rate hikes.

In a widely expected move, the Fed announced its decision to raise interest rates by 50 basis points, or half a percentage point, to a target range of 4.25 to 4.50%.

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