Oil Prices Rise on Optimistic Global Demand Outlook
In a positive turn of events, oil prices inched higher on Wednesday as the US Energy Information Administration and OPEC shared optimistic views on global demand. Industry data revealed a larger-than-expected drop in US crude oil inventories last week, boosting market sentiment, according to Reuters.
Brent crude futures saw an increase of 0.6 percent, reaching $82.42 a barrel at 9:30 a.m. Saudi time, while US West Texas Intermediate crude futures climbed by 0.8 percent to $78.52.
Upbeat Forecasts Drive Market Sentiment
The EIA raised its 2024 world oil demand growth forecast to 1.10 million barrels per day, up from the previous estimate of 900,000 bpd. OPEC also maintained its 2024 forecast for robust growth in global oil demand, citing expectations for increased travel and tourism in the latter half of the year.
Following a slight dip of over 2 percent last week after OPEC and allies announced plans to phase out output cuts starting October, prices are now on the rise as demand outlook remains strong.
Market Analysts Weigh In
“Crude oil edged higher as OPEC stood firm on its demand forecasts,” noted analysts from ANZ, highlighting the role of China and emerging economies in driving oil demand. The market seems poised to easily absorb the phased output cuts announced by OPEC last week.
US Crude Inventories Decline
US crude oil stocks fell by 2.428 million barrels in the week ending June 7, surpassing expectations of analysts surveyed by Reuters. More data from the EIA is set to be released at 10:30 a.m. EDT – 5:30 p.m. Saudi time on Wednesday.
Anticipation Builds Ahead of US Economic Reports
Investors are eagerly awaiting the release of the US Consumer Price Index report before the market opens on Wednesday, along with the US central bank’s policy announcement later in the day. A dovish stance from the Fed is expected to support oil prices by stimulating economic growth and boosting demand.
However, concerns remain about the global economic slowdown affecting oil prices in the long term.
China’s Economic Indicators
In China, the world’s largest crude importer, consumer inflation remained steady in May while producer price declines showed signs of easing. These indicators suggest that Beijing may need to take further steps to bolster domestic demand and support an uneven economic recovery.