Oil Prices Rise on Hopes of Increased Fuel Demand
In London, oil prices inched up on Monday, driven by optimism surrounding a potential surge in fuel demand during the upcoming summer months. However, these gains were tempered by the strengthening of the dollar, as expectations for immediate cuts to US interest rates diminished, as reported by Reuters.
Goldman Sachs analysts are bullish on Brent crude, predicting a rise to $86 a barrel in the third quarter. They anticipate strong demand for transportation services during the summer, leading to a projected third-quarter deficit of 1.3 million barrels per day in the oil market.
At 11:15 a.m. Saudi time, Brent crude futures saw a 0.4 percent increase, climbing to $79.90 a barrel. Meanwhile, US West Texas Intermediate crude futures rose by 0.5 percent to $75.89.
UBS analysts shared their perspective in a report, stating that the current market sentiment is overly pessimistic. They foresee significant declines in oil inventories in the coming weeks.
Despite efforts by OPEC+ to cut production, oil inventories have continued to rise. This trend has led to concerns in the market, particularly with plans to ease production cuts from October onwards.
Energy consultancy FGE remains optimistic, projecting a rally in oil prices that could reach the mid-$80s in the third quarter. However, they emphasize the need for concrete evidence of tightening in preliminary inventory data for market stabilization.
The market was impacted by a robust US dollar, which surged following positive job data from Friday. This caused investors to reassess their expectations for interest rates, affecting the performance of dollar-denominated commodities like oil.
Furthermore, the euro experienced a decline after French President Emmanuel Macron announced a snap parliamentary election, adding to the fluctuations in currency exchange rates.