NEW YORK CITY: Global oil prices climbed on Thursday (Friday in Manila) after the International Energy Agency (IEA) raised its demand outlook for next year.
The continuing geopolitical uncertainty over a diplomatic solution to Syria’s chemical weapons underpinned the market, analysts said.
The US benchmark contract, West Texas Intermediate for October delivery, added $1.04 to close at $108.60 on the New York Mercantile Exchange.
Europe’s main contract, Brent North Sea crude for October, jumped $1.13 to $112.63 a barrel in London trade.
“Demand growth to pick up speed next year after holding steady for 2013,” the IEA said in its monthly report.
“Global demand growth is forecast to rise to 1.1 million barrels a day [mb/d] in 2014, as the underlying macroeconomic backdrop solidifies,” the IEA said.
The agency projected 2013 demand growth would remain flat at 895,000 barrels a day, citing stronger-than-expected oil deliveries in July that offset concerns about the impact on demand in emerging-market economies from currency fluctuations.
“The rapid depreciation of many emerging market currencies since first quarter 2013, if sustained, may adversely affect oil demand,” warned the IEA.
Meanwhile, the market kept an eye on the potential US-led military strike in Syria over its alleged use of chemical weapons, whose prospects appeared diminished by a Russian plan to secure the weapons.
“Oil prices have risen back above the $112-per-barrel mark . . . with the threat of military action against Syria continuing to support prices,” said energy trader Gary Hornby at British-based consult ancy Inenco.
“With the US and Russia continuing to differ over the resolution of the Syrian conflict, and the chemical weapons handover still uncertain, there remains a large risk premium at present.”
Oil analyst Fawad Razaqzada at trading firm GFT said that it looked increasingly unlikely that the US would launch a military strike on Syria, “given the fact that Syria has announced it would surrender control over its chemical weapons.”