Oil Prices Dip but Head for 4% Weekly Gain
In the world of oil, prices are always on the move. On Friday, they took a slight dip, but that didn’t overshadow the nearly 4% gain they were on track to achieve for the week. What’s driving this fluctuation? Let’s dive in.
IEA Boosts 2024 Oil Demand Forecasts
The International Energy Agency (IEA) has once again revised its 2024 oil demand forecasts, this time higher. This marks the fourth adjustment since November, with disruptions in Red Sea shipping due to Houthi attacks playing a significant role in the decision.
Market Dynamics at Play
With Brent crude oil futures falling slightly to $85.17 a barrel and US West Texas Intermediate crude at $81.04, the market is experiencing some interesting dynamics. The IEA predicts a rise in world oil demand by 1.3 million barrels per day in 2024, creating a slight supply deficit this year.
Refinery Utilization on the Rise
ANZ analysts highlight the expected uptick in US oil refinery utilization, following capacity shutdowns in January due to winter conditions. European refinery margins are also improving, signaling a tightening market balance.
Factors Influencing Prices
Despite a stronger US dollar and Ukrainian strikes on Russian oil refineries, oil prices remain resilient. Unexpected drops in US crude oil stockpiles and an increase in demand are further supporting the market.
Economic Indicators and Oil Demand
Economic factors also come into play, with lower interest rates potentially boosting consumer borrowing and economic growth. While signs of slowing economic activity in the US are present, the Federal Reserve is unlikely to make any interest rate cuts before June.
In the ever-evolving world of oil markets, a multitude of factors are at play, shaping prices and demand. Stay tuned for more updates on this dynamic industry.