Oil prices gain on the back of expected increase in demand

16 May 2024 , 10:11 AM

On Thursday, oil prices continued to rise from the previous session on indications of increased demand in the United States, where CPI data revealed lower-than-expected inflation, supporting the case for an interest rate reduction that may lead to even higher demand.

U.S. West Texas Intermediate (WTI) crude climbed 43 cents, or 0.6%, to $79.06, while Brent futures increased 42 cents, or 0.5%, to $83.17 a barrel.

The financial markets’ expectations for a Federal Reserve rate decrease in September were bolstered by U.S. consumer prices rising less than anticipated in April. This move might moderate the strength of the dollar and lower the price of oil for holders of other currencies.

According to data released by the Energy Information Administration (EIA), the United States’ stockpiles of crude oil, petrol, and distillate decreased, indicating an increase in both refining operations and fuel consumption.

In contrast to the 543,000 barrel consensus expert projection in a Reuters poll, crude stockpiles decreased by 2.5 million barrels to 457 million barrels during the week that concluded on May 10, according to the EIA.

Israeli forces fought Hamas militants throughout Gaza, including the civilian haven of Rafah, in the Middle East.

Negotiations for a ceasefire, brokered by Qatar and Egypt, have reached a deadlock as Israel refuses to back down until Hamas is completely destroyed.

Gains were limited as a result of the IEA reducing its estimate of the growth in oil demand by 2024 and increasing the difference between its assessment and that of the producer organisation OPEC.

The Organisation for Economic Co-operation and Development (OECD) projected that this year’s global oil consumption will increase by 1.1 million barrels per day (bpd), which is 140,000 bpd less than its previous prediction. This is mostly because of the sluggish demand in the industrialised countries of the OECD.

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