© Reuters. A model of petrol pump and a rising stock graph are seen in this illustration taken January 15, 2024. REUTERS/Dado Ruvic/Illustration/file photo

By Robert Harvey

LONDON (Reuters) -Oil prices extended gains on Thursday, as investors digested the International Energy Agency’s (IEA) latest oil market report, in which it made an upward revision to demand growth forecasts and cut its projection for non-OPEC supply in 2024.

futures for May rose 72 cents, or 0.86%, to $84.75 a barrel by 1021 GMT. U.S. West Texas Intermediate (WTI) crude for April was up 83 cents, or 1.04%, at $80.55.

The IEA forecast first-quarter global demand growth to rise a higher than previously expected 1.7 million barrels per day (bpd) because of an improved U.S. outlook and firmer bunkering demand owing to longer voyages to avoid the Red Sea.

It also raised its 2024 demand growth forecast by 110,000 bpd from its previous report but warned that “the global economic slowdown acts as an additional headwind to oil use”. The agency expects overall demand growth to slow to 1.3 million bpd this year after growth of 2.3 million bpd last year.

“Whilst the IEA’s view on global oil balance is still more than a country mile away from OPEC’s prognosis, this report does nothing to dent the developing upbeat mood,” said PVM analyst Tamas Varga.

The IEA also cut its 2024 supply forecast, factoring in the latest cuts from the OPEC+ coalition as well as lower output from non-OPEC nations. It expects oil supply to rise by 800,000 bpd to 102.9 million bpd this year.

“Quite a bullish report, with upward revisions on demand growth, and lower supply growth estimates,” said UBS analyst Giovanni Staunovo.

Brent closed above $84 a barrel for the first time since November on Wednesday after both contracts chalked up close to 3% daily gains on an elevated U.S. demand outlook and heightened geopolitical risk.

U.S. gasoline inventories slid for a sixth straight week, falling by 5.7 million barrels to 234.1 million barrels, the Energy Information Administration (EIA) said on Wednesday, triple the expectations for a draw of 1.9 million barrels.

oil stockpiles also fell unexpectedly as processing increased.

Supportive on the demand front, the U.S. bought about 3.25 million barrels of oil for the country’s Strategic Petroleum Reserve for August delivery.

On the supply side, Ukrainian drone strikes on Russian refining facilities continued for a second day on Wednesday.