By Natalie Grover

LONDON (Reuters) – The International Energy Agency (IEA) trimmed its forecast for 2024 oil demand growth on Wednesday, further expanding the chasm between it and oil producer group OPEC regarding the outlook for global oil demand this year.

The Paris-based energy watchdog lowered its growth outlook for this year by 140,000 barrels per day (bpd) to 1.1 million bpd, largely citing weak demand in developed OECD nations.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday stuck by its expectation that world oil demand will rise by 2.25 million barrels per day (bpd) in 2024.

The sizable split between the two forecasts is partly due to different views on the pace of the global transition to cleaner fuels.

The IEA in its monthly oil report said its lower 2024 oil demand forecast was linked to poor industrial activity and a mild winter sapping gasoil consumption, particularly in Europe where a declining share of diesel cars was already undercutting consumption.

“Combined with weak diesel deliveries in the United States at the start of the year, this was enough to tip OECD oil demand in the first quarter back into contraction,” the IEA said.

The IEA’s 2025 oil growth forecast of 1.2 million bpd – slightly higher than its previous estimate – is now marginally higher than its projection for this year.

OPEC has estimated oil demand growth of 1.85 million bpd for next year.

Investing.com– Gold prices steadied in Asian trade on Wednesday, taking advantage of a softer dollar as markets hunkered down before key U.S. consumer inflation data which is likely to factor into the outlook for interest rates. 

Among industrial metals, copper prices rose to over two-year highs, as the prospect of tighter supplies and fiscal stimulus in top importer China helped offset concerns over sluggish demand. 

Gold saw overnight gains after comments from Federal Reserve Chair Jerome Powell suggested that U.S. rates will not rise any further. These comments were also a key factor in the ’s decline. 

steadied at $2,357.65 an ounce, while expiring in June rose 0.1% to $2,361.90 an ounce by 00:50 ET (04:50 GMT). 

CPI data awaited after PPI surprises to the upside 

Markets were now focused squarely on data for April, especially after data released overnight surprised to the upside.

The stronger PPI reading ramped up concerns that sticky inflation will deter any potential interest rate cuts this year. A hot CPI reading is likely to further these concerns. 

While Powell’s comments, chiefly that monetary policy remained tight enough, helped soothe market concerns over higher rates, the Fed Chair still warned that the central bank needed much more confidence that inflation was coming down to its 2% annual target. 

Such a scenario means the Fed is likely to keep rates high for longer, which in turn bodes poorly for metal prices. High rates push up the opportunity cost of investing in precious metals.

Other precious metals also advanced on Wednesday, capitalizing on a softer dollar. 

rose slightly to $1,065.85 an ounce, while rose 0.2% to $28.767 an ounce. 

Copper steadies at over 2-yr highs, more China cues awaited 

on the London Metal Exchange rose 0.6% to $10,145.0 a ton, while steadied at $5.0137 a pound. 

Both contracts were at their highest levels since April 2022, after top importer China said it will begin a massive, 1 trillion yuan ($138 billion) bond issuance this week. The issuance will be directed towards shoring up economic growth. 

Copper prices were sitting on a strong run-up over the past two months, buoyed by the prospect of tighter supplies amid Russian metal sanctions and Chinese refinery cuts.

Focus this week is now on and readings from China, due on Friday.

Investing.com– Oil prices rose in Asian trade on Wednesday as industry data showed a drop in U.S. inventories and boosted expectations of tighter supplies, although anticipation of key inflation data kept gains limited. 

Crude markets took some positive cues from Federal Reserve Chair Jerome Powell, who said that the world’s biggest economy remained resilient, while China’s outlining of plans for a massive 1 trillion yuan ($138 billion) bond issuance also factored into some strength. 

Expectations of tighter North American markets were also furthered by a swathe of devastating wildfires in Canada. Fort McMurray- a major Canadian oil sands city- saw about 6000 people evacuated due to an approaching fire. 

Still, gains in crude were limited by hotter-than-expected U.S. inflation data on Tuesday. The reading saw markets turn fearful of a stronger-than-expected inflation reading on Wednesday. 

expiring in July rose 0.4% to $82.70 a barrel, while rose 0.4% to $77.97 a barrel by 21:06 ET (01:06 GMT). 

US inventories shrink more than expected- API 

Data from the (API) showed on Tuesday that U.S. oil inventories shrank 3.1 million barrels in the week to May 10, more than expectations for a draw of 1.1 million barrels. 

The data also showed a decline in gasoline stockpiles, while distillates rose by 349,000 barrels.

The reading spurred some hopes that U.S. fuel demand was picking up with the advent of the travel-heavy summer season- a trend that could help tighten global crude supplies, even as U.S. production remains at record highs.

Shrinking U.S. inventories and potential supply disruptions in Canada also present a tighter outlook for North American crude markets. 

The API data usually heralds a similar reading from official , which is due later on Wednesday. 

Inflation jitters in play as CPI data looms

Oil markets remained on edge ahead of key U.S. CPI data due later on Wednesday, especially as PPI data for April read hotter-than-expected.

Traders were wary of any more signs of sticky U.S. inflation, which are likely to push the Fed into keeping interest rates high for longer- a scenario that bodes poorly for crude.

High rates are expected to stall global economic activity and potentially dent demand for oil.