Oil prices surged on Wednesday after the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) both forecast a rebound in demand over the course of next year and as U.S. rate hikes are expected to ease alongside slowing inflation.
Brent crude futures last rose $1.20, or 1.49%, to $81.88 U.S. per barrel, while U.S. West Texas Intermediate (WTI) crude futures were up $1.26 at $76.65. Both contracts fell around 11% last week.
The Brent contract has returned to a backward dated market structure whereby front-month loading barrels trade higher than later deliveries, which indicates worries about oversupply are subsiding.
Looking into 2023, OPEC said it expects oil demand to grow by 2.25 million barrels per day (bpd) over next year to 101.8 million bpd, with potential upside from China, the world’s top importer.
The IEA, seeing Chinese oil demand recovering next year after a 400,000-bpd contraction in 2022, raised its 2023 oil demand growth estimate to 1.7 million bpd for a total of 101.6 million bpd.
