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
GE Vernova Completes Spin-Off from GE
2024-04-04 - GE Vernova, an energy transition company, began trading as an independent company on the New York Stock Exchange this week.
CorEnergy Infrastructure to Reorganize in Pre-packaged Bankruptcy
2024-02-26 - CorEnergy, coming off a January sale of its MoGas and Omega pipeline and gathering systems, filed for bankruptcy protect after reaching an agreement with most of its debtors.
First Solar’s 14 GW of Operational Capacity to Support 30,000 Jobs by 2026
2024-02-26 - First Solar commissioned a study to analyze the economic impact of its vertically integrated solar manufacturing value chain.
CEO: Coterra ‘Deeply Curious’ on M&A Amid E&P Consolidation Wave
2024-02-26 - Coterra Energy has yet to get in on the large-scale M&A wave sweeping across the Lower 48—but CEO Tom Jorden said Coterra is keeping an eye on acquisition opportunities.
Excelerate Declares Quarterly Cash Dividend
2024-02-26 - Excelerate Energy’s dividend is payable March 28 to Class A common stockholders of record by March 13.