Oil bounces back on short-covering after OPEC’s gloomy demand forecast

Oil rebounded on Wednesday on short-covering after prices fell near a two-week low in the prior session on OPEC's demand forecast cut, while the dollar hit a seven-month high, capping crude's gains.

Brent crude futures were up 61 cents, or 0.9%, at $72.50 a barrel by 1:13 p.m. EST (1813 GMT), while U.S. West Texas Intermediate crude (WTI) futures gained 59 cents, or 0.9%, at $68.71.

The benchmarks closed at their lowest level in nearly two weeks on Tuesday after the Organization of the Petroleum Exporting Countries lowered its global oil demand growth forecasts for 2024 and 2025 amid demand concerns in China.

OPEC cited weakness in China, India, and other regions for its decision, which marked the producer group's fourth straight downward revision for 2024.

The International Energy Agency, which has a much lower demand growth forecast than OPEC's, is set to publish its updated estimate on Thursday.

"The forecast is no doubt bearish and the market is still digesting it," said Bob Yawger, director of energy futures at Mizuho.

However, the market bounced back as some speculative investors tried to recoup the losses they took, said Yawger.

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman have underscored the importance of continuing a "close coordination" within the OPEC+ group of oil producers during a phone call on Wednesday, the Kremlin said.

On the supply side, markets could still face disruption from Iran or further conflict between Iran and Israel, Barclays said in a note.

Trump's expected pick for secretary of state, Senator Marco Rubio, could be bullish for prices as his hawkish view on Iran could see sanctions enforced, potentially removing 1.3 million bpd from global supply, said Panmure Liberum's Ashley Kelty.

Iran's oil minister said Tehran had made plans to sustain oil production and exports and was ready for possible oil curbs by the U.S., the ministry's news website Shana reported.

Limiting oil price gains, the dollar advanced to near a seven-month high against major currencies after data showed U.S. inflation for October increased in line with expectations, suggesting the Federal Reserve will keep cutting rates.

A stronger greenback makes dollar-denominated oil more expensive for holders of other currencies, which can reduce demand.

The American Petroleum Institute's weekly inventory data, due at 4:30 p.m. EST (2130 GMT) was also in focus, with analysts polled by Reuters expecting a 100,000-barrel rise in crude stocks last week. Government data is due on Thursday at 11 a.m. Both reports are delayed a day due to Monday's Veterans Day holiday.