Crude oil futures surged on Thursday on higher estimates for global oil demand this year and lower oil supply growth estimates from non-Opec countries in the latest monthly report from the International Energy Agency, the energy watchdog for the developed world.
The IEA raised its global oil demand increase for the year to 1.5m barrels of oil a day, a rise of 100,000 b/d from its previous estimate to take average daily global oil demand to 84m b/d this year.
The Paris-based agency cut estimates for oil supplies from countries outside of the Organisation of the Petroleum Exporting Countries by 175,000 b/d to 50.9m b/d, and has now cut its non-Opec supply estimates by 400,000 b/d since July 2004.
At the same time, it has raised projections for the demand for Opec oil supplies to an average of 28.3m b/d for this year, a rise of 900,000 b/d since its first projection for this year made in July.
Industry stockpiles of crude oil, gasoline and other oil products held by OECD members fell by 85m barrels in December, to 2.577bn, or about 51 days worth of demand, the IEA said. Opec has said that it would look to cut supplies if stockpiles rose to near 60 days of future demand.
IPE Brent for March delivery gained $1.22 to $44.35 a barrel in late afternoon London trade. With the March contract expiring at the close of trade on Friday, April Brent attracted more volume with the price up $1.31 to $44.75 a barrel.
March Nymex WTI advanced $1.34 cents to $46.88 a barrel in early afternoon New York trade. The relatively high oil price had a significant effect on the US trade deficit as the world's largest consumer of oil spent $174.46bn on energy-related petroleum products last year, up $45bn from the previous year.
Another large US trade deficit pushed the dollar lower, sending the gold price about $5 higher. Bullion was quoted at $416.65/$417.40 a troy ounce in late London trade, from its late quote of $412.75/$413.50 in New York on Wednesday.
Silver and platinum prices followed gold prices higher. Silver gained 36 cents to $6.93/$6.96 a troy ounce, and platinum gained $17 to $863 a tory ounce.
Zinc prices reached a 7½ year high of $1,332.5 a tonne yesterday before finishing at $1,330 at the close of open-outcry trading on the London Metal Exchange, a gain of $44 on the day. Zinc prices have risen 40 per cent since last September, but will have to rise more than $300 if it is to exceed the July 1997 peak of $1,675 a tonne.
Zinc, which has lagged the price spurts of nickel and copper over the past two years, is catching up with the rest of the base metals sector on Chinese demand.
