Oil Prices Rebound on Rising Demand

Oil prices rose on Wednesday after the International Energy Agency said demand for crude is increasing at its fastest pace in five years.

The agency’s closely watched oil-market report showed signs that oversupply is significantly smaller than some worst-case scenarios suggest, analysts said. U.S. futures had hit a six-year low Tuesday after China’s currency plummeted in value, which helped raise fears that global demand won't catch up to rampant supply.

“Oil’s plunge below $50 a barrel from triple digits a year ago has seen demand react more swiftly than supply,” the IEA said on Wednesday. Still, the Paris-based agency said the oversupply, which has weighed on oil prices since last year, is likely to persist as global production “continues to grow at a breakneck pace.”

Light, sweet crude for September delivery recently gained 0.8%, $43.43 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained, 0.6%, to $49.46 a barrel on ICE Futures Europe.

Oil prices on Wednesday also found support in the weaker dollar. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, fell 0.8%. Oil is priced in dollars and it becomes cheaper for holders of other currencies as the greenback falls. (by Georgi Kantchev and Timothy Puko, Wall Street Journal)


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