Oil prices stabilised today, after dropping by more than $1 earlier in the session, following signs of bullish demand in an International Energy Agency (IEA) report.
Brent crude futures rose eight cents, or 0.09%, to $93.25 a barrel this morning. US West Texas Intermediate crude was at $87.35 a barrel, up four cents, or 0.05%.
Prices stabilised following some "positive elements" in an IEA report published today, said UBS analyst Giovanni Staunovo.
The IEA expects large-scale switching from gas to oil, estimated to average 700,000 barrels per day (bpd) in October 2022 to March 2023 - double the level of a year ago. The IEA said global observed inventories fell by 25.6 million bbl in July.
This follows forecasts from the Organization of the Petroleum Exporting Countries yesterday for growth in global oil demand in 2022 and 2023, citing signs that major economies were faring better than expected despite challenges such as surging inflation.
But analysts suggested OPEC's bullish take may be wishful thinking.
"OPEC continues to view the global economy with rose-tinted glasses despite the threat of recession in several key economies," said Stephen Brennock of oil broker PVM.
And the IEA expects growth in global oil demand to grind to a halt in the fourth quarter of this year as an economic slowdown deepens.
A hotter-than-expected US inflation report yesterday dashed hopes the Fed could scale back its rate policy tightening in the coming months.
Fed officials are set to meet next Tuesday and Wednesday, with inflation remaining way above its 2% target.
Price pressure continued to follow tough ongoing Covid-19 curbs in China which are squeezing fuel demand at the world's largest oil importer.
On the supply side, US crude stocks rose by about 6 million barrels for the week ended September 9, according to market sources citing American Petroleum Institute figures today.