Crude Oil Ends Sharply Higher As IEA Cuts Non-OPEC Supply Forecast

(RTTNews) - U.S. crude oil soared to end sharply higher on Friday, after the International Energy Agency in its monthly report slashed the forecast for non-OPEC supplies this year, adding that the sharp plunge in crude prices could help bolster demand for OPEC oil.

Prices were boosted when the International Energy Agency said the collapse in oil prices is expected to curtail non-OPEC oil production this year. The report hints that OPEC's strategy of crushing U.S. shale and Canadian oil sands competition may be working.

Crude oil fell near $44 on Tuesday before stabilizing, having plunged 55 percent from summertime highs above $100.

"A price recovery--barring any major disruption--may not be imminent, but signs are mounting that the tide will turn," the IEA said in its closely watched monthly oil market report, as it slashed its forecast for the increase in non-OPEC oil supply this year by 350,000 barrels a day.

Meanwhile, the Organization of the Petroleum Exporting Countries on Thursday lowered its forecast for world oil demand growth in 2015 by 70,000 barrels a day from previous estimates. The cartel also lowered its forecast for the increase in non-OPEC oil supply from the U.S. this year by 100,000 barrels a day from its forecast production increase.

Light Sweet Crude Oil futures for February delivery, surged $2.44 or 5.3 percent to close at $48.69 a barrel on the New York Mercantile Exchange Friday.

Crude prices for February delivery scaled a high of $48.69 a barrel intraday and a low of $45.95.

Light Sweet Crude Oil futures for March delivery, the most actively traded contract, plummeted $2.40 or 5.1 percent to close at $49.13 a barrel on the New York Mercantile Exchange Friday.

Crude prices for March delivery scaled a high of $48.89 a barrel intraday and a low of $46.40.

On Thursday, crude oil surged by 2.23 or 4.6 percent, to close at $46.25 a barrel, with investors focused on the developments in the currency market after the Swiss National Bank preferred to to abandon its currency ceiling. Nonetheless, fears of excess supply persisted after the official weekly oil report from the U.S. Energy Information Administration showed crude stockpiles in the U.S. to have jumped more than expected last week.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 92.76 on Friday, up from its previous close of 92.14 late Thursday in North American trade. The dollar scaled a high of 93.26 intraday and a low of 91.51.

The euro trended lower against the dollar at $1.1561 on Friday, as compared to its previous close of $1.1633 late Thursday in North American trade. The euro scaled a high of $1.1656 intraday and a low of $1.1462.

In economic news, a report from the Labor Department on Friday showed U.S. consumer price index dropped 0.4 percent in December following a 0.3 percent decrease in November. While the drop in prices came in line with economist estimates, it reflected the biggest monthly decrease since December of 2008. The continued drop in prices were largely due to another sharp decline in energy prices, which plummeted by 4.7 percent in December after tumbling by 3.8 percent in November.

U.S. industrial production in December fell modestly with utilities output showing a sharp pullback, a Federal Reserve report said Friday. The report said industrial production edged down by 0.1 percent in December after surging up by 1.3 percent in November. The modest pullback matched economist estimates.

Consumer sentiment in the U.S. has seen a significant improvement in January, a report from the University of Michigan on Friday. The report showed the preliminary reading on consumer sentiment index for January at 98.2 compared to the final December reading of 93.6. Economists had expected the index to climb to a reading of 94.1. With the much bigger than expected increase, the consumer sentiment index reached its highest level since January of 2004.

Meanwhile, International Monetary Fund Managing Director Christine Lagarde said late Thursday that global recovery faces strong headwind despite lower oil prices and higher growth in the United States. She The world growth is still too low, too brittle, and too lopsided, she told the Council on Foreign Relations in Washington. The IMF is set to publish its global growth forecasts next week.

Eurozone inflation turned negative in December, as initially estimated, for the first time in more than five years, final data from Eurostat showed Friday. The Harmonized Index of Consumer Prices fell 0.2 percent year-on-year in December, reversing the 0.3 percent rise in November. This was the biggest fall seen since September 2009, when prices decreased 0.3 percent.

Consumer prices declined for the first time since October 2009, when prices fell 0.1 percent.