Oil swings as IEA demand cut vies with U.S. restocking plan

Oil fluctuated after the International Energy Agency trimmed its estimates for global demand, while the US mulled when to refill its strategic oil reserve.

West Texas Intermediate traded above US$87 a barrel after swinging between gains and losses. The IEA sees global oil consumption rising by about 110,000 barrels a day less than its previous forecast this year, though it still anticipates a 2 million barrel-a-day increase. 

The report followed a bumpy 24 hours. On Tuesday hotter-than-expected US inflation prompted investors to bank on a continued path of sharp interest rate hikes. Meanwhile the US was said to be mulling buying oil below US$80 to refill its strategic oil reserve after releases this year, while an industry survey pointed to a hefty expansion of separate commercial stockpiles.

Oil hit the lowest since January earlier this month as traders attempted to price in a possible global slowdown, tighter monetary policy, and lower energy demand. The potential for further interest rate hikes have bolstered the case for slower growth, while commodity markets broadly are wrestling with lower liquidity.