Oil prices rose on Thursday as OPEC forecast relatively strong growth in global oil demand over the next two years, while the market also eyed disrupted U.S. oil production amid a cold blast and tensions in the Middle East.
Brent crude futures LCOc1 gained 49 cents, or 0.6%, to $78.37 a barrel by 0740 GMT, while U.S. West Texas Intermediate crude futures CLc1 rose 70 cents, or 1.0%, to $73.26.
OPEC, in a monthly report, said world oil demand is expected to rise by a robust 1.85 million barrels per day (bpd) in 2025 to 106.21 million bpd. For 2024, OPEC saw demand growth of 2.25 million bpd, unchanged from its forecast in December.
However, price gains were capped for now as the market considered mixed drivers.
"Brent crude prices remain broadly stuck in a range as they have been over the past two weeks, as market participants struggle to weigh mixed demand-supply dynamics with prevailing geopolitical tensions," said Yeap Jun Rong, market strategist at IG.
An unexpected build in U.S. crude stockpiles and challenging conditions for China's economic recovery continue to cast a shadow over the oil demand outlook, said Yeap, though the market remains wary of geopolitical developments.
In the latest tensions, Pakistan conducted strikes inside Iran targeting Baluchi separatist militants, the country's foreign ministry said, two days after Iran conducted strikes inside Pakistani territory.
Meanwhile, in the top oil-producing U.S. state of North Dakota, oil output fell by 650,000 to 700,000 bpd to less than half its typical output, as temperatures dropped below minus 18 degrees Celsius, the state said.
The International Energy Agency (IEA) expects oil markets to be in a "comfortable and balanced position" this year despite Middle East tensions, amid rising supply and a slowing demand growth outlook, its executive director, Fatih Birol, told the Reuters Global Markets Forum on Wednesday.
Attacks by Yemen's Houthis on ships in the Red Sea have forced many companies to divert cargoes around Africa, adding to journey times and costs. The U.S. on Wednesday conducted another round of strikes against Houthi targets in Yemen in retaliation for the attacks on shipping.
The Iran-aligned Houthis say they are acting in solidarity with Palestinians during Israel's ongoing war with Gaza.