Oil futures: Brent climbs higher as OPEC maintains demand outlook

Quantum Commodity Intelligence – Crude oil futures hours Tuesday were higher as markets maintained the upward trend seen so far during the first half of February, while OPEC remains upbeat on the outlook for oil demand.

Front-month Apr24 ICE Brent futures were trading at $82.67/b (1950 GMT), compared to the day's high of $83.24/b and Monday's settle of $82/b.

At the same time, Mar24 NYMEX WTI was trading at $77.72/b versus Monday's settle of $76.92/b. 

Benchmarks rallied more than 6% last week after Gaza ceasefire talks broke down, but the broader upward trend was holding amid concerns over a wider conflict in the Middle East.

"Overall, we maintain the view Brent and WTI will probably remain rangebound… but with disruption risks, OPEC+ production restraint, a tightening product market and incoming rate cuts potentially leaving the risk/reward skewed slightly to the upside," said Ole S Hansen, Head of Commodity Strategy at Saxo Group.

Yemen's Iranian-back Houthis fired two missiles in the Red Sea on Monday, which US officials said caused minor damage to an Iran-bound cargo ship, increasing the potential threat for all commercial vessels in the region.

Crude markets have also found support this month from firmer crack spreads, particularly distillates, as Red Sea disruptions increase arbitrage times while Russian exports are down on a combination of OPEC+ caps and refinery outages.

OPEC

In its monthly report, OPEC kept its global demand growth outlook for this year and next unchanged, forecasting around 4 million bpd of new demand over two years, while cutting its growth forecast for non-OPEC supply by 150,000 bpd.

Meanwhile, scrutiny has also fallen on Iraq after production surveys showed OPEC's number two producer pumping significantly above quota. 

Iraqi oil minister Hayan Abdel-Ghani told reporters on Monday that Iraq is committed to OPEC discipline and to producing no more than 4 million bpd, but the latest survey from S&P Global showed that Iraq pumped an average of 4.27 million bpd in January.

Tuesday also saw the release of the US Consumer Price Index, which will have a key bearing on the prospects for an early rate reduction, although most see a March cut as increasingly unlikely. The CPI came in 3.1% on an annual basis with inflation up 0.3% in January from December, both numbers coming in above expectations. 

The IEA will release its own oil monthly report on Thursday.