Crude oil futures gained on Wednesday amid forecasts that global oil demand growth will rebound strongly next year, adding further weight to the view that the current slowdown in US oil demand is only temporary.
The US Department of Energy said on Wednesday world oil demand would rise by about 1.9m barrels a day to 85.6m b/d in 2006. This estimate is more bullish than the forecast made on Tuesday by the International Energy Agency, the energy adviser to the developed world. The IEA predicted that oil demand would rise by 1.75m b/d to 85.15m b/d.
The US department’s statistical arm, the Energy Information Administration, also forecast the US benchmark crude West Texas Intermediate to average $64.40 a barrel in the fourth quarter, or $3 lower than the September projection, which was made prior to the additional loss of output resulting from Hurricane Rita.
The EIA also forecast oil prices would stay above $63 a barrel during 2006, an upward revision of $1 a barrel from its September forecast.
IPE Brent for November delivery gained 62 cents to $60.70 a barrel in late afternoon London trade, extending the $1.30 advance from the previous session.
November Nymex WTI added 59 cents to settle at $64.12 a barrel in New York, furthering the $1.73 gain on Tuesday.
US natural gas futures were slightly firmer after the EIA predicted a slightly colder than normal winter this year. The November Nymex Henry Hub natural gas futures contract rose 5 cents to $13.57 per million British thermal units.
“The National Oceanic and Atmospheric Administration projects a 0.4 per cent colder winter in the lower 48 states, in terms of heating degree-days relative to normal winter weather, which would be 3.2 percent colder than last winter,” the EIA said in its annual winter fuels outlook report.
Wheat futures on the Chicago Board of Trade were higher after the US Department of Agriculture lowered its estimates of US and world wheat stocks at the end of the current season. CBOT wheat for December delivery added 6.25 cents to $3.49 a bushel.
The USDA cut its forecast for world wheat ending stocks to 137.43m tonnes, from 139.66 million in September.
CBOT corn and soyabean futures were also firmer after the USDA report, which is seen as one of the most important in the year, as more than two-thirds of global grains are grown in the Northern Hemisphere where corp harvesting is in full swing.
November CBOT soyabean futures were up 16 cents to $5.795 a bushel after the USDA forecast 2005 US soy production at 2.967bn bushels, below analysts estimates of more than 3bn, and US end of season soy stocks at 260m, down from analysts’ estimates of 291m.
The USDA forecast 2005 US corn output at 10.857bn bushels, in line analysts estimates. December CBOT corn futures were 3.5 cents higher at $2.06 a bushel.
