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Brent crude gained on Friday, but was down for the week. Meanwhile, the International Energy Agency increased its estimate for 2014 oil demand.
However, despite closing higher on Friday, oil futures were down almost 4 percent for the week. The decline came as traders weighed the risks tied to the referendum in Crimea, which could threaten crude supply out of Russia as well as the region’s overall energy demand.
“It is a difficult analysis as to whether the Ukraine situation is bullish or bearish for oil,” analysts at the Kilduff Report said on Friday.
“Russia’s oil production and supply to Europe hangs in the balance and its loss to the market is certainly supportive,” they continued. “The U.S. cannot fill the gap with [Strategic Petroleum Reserve] oil or anything else.”
Large domestic supply builds in the US and lower demand from China also assisted in capping any significant gains for oil this week.
IEA raises 2014 outlook
On a more positive note, the International Energy Agency (IEA) revised its estimated oil demand outlook for 2014 on the back of recovering global economic growth. It sees global oil consumption increasing by 1.4 million barrels per day, or 1.5 percent, to 92.7 million barrels a day.
“Growth momentum is expected to benefit from a more robust global economic backdrop,” the IEA said in its monthly market report. Still, the agency believes supply will be pressured in the next few months as seasonal consumption slows.
According to the IEA, global oil supplies were higher in February, up by 600,000 barrels a day, to 92.81 million barrels. The increase was led by OPEC crude output, which checked in at 500,000 barrels per day more that month.
The IEA sees a surge in supply out of Iraq and other oil producers as sufficient to meet this year’s growing demand.
Matt Parry, chief oil analyst for the IEA, told MarketWatch that “[g]iven the recent uptick in geopolitical tensions — which is about the most I can really say about the Crimea at the moment — the likely easing in the call on [demand for OPEC oil], to 28.9 [million barrels a day] in 1Q14, should provide something of a cushion to markets, noting OPEC produced 30.5 mb/d in February and 30.0 mb/d in January.”
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.