Mumbai, 16 May (Commoditiescontrol): Crude oil prices climbed on Thursday, supported by stronger demand indications from the U.S. following unexpected lower inflation figures, bolstering prospects for a Federal Reserve rate cut that could enhance demand further. Brent futures increased by 42 cents to $83.17 a barrel, a 0.5% rise, while U.S. West Texas Intermediate (WTI) crude saw a 43-cent increase, or 0.6%, to $79.06 a barrel.
The slower-than-anticipated rise in U.S. consumer prices in April has raised financial market expectations of a rate cut by the Fed in September, which might weaken the dollar and make oil cheaper for those holding other currencies.
Additionally, a drop in U.S. crude oil, gasoline, and distillate inventories points to heightened refining activities and fuel demand, according to data from the Energy Information Administration (EIA). Specifically, crude inventories decreased by 2.5 million barrels to 457 million barrels for the week ending May 10, contrary to the forecasted 543,000 barrel drop.
Support for oil prices also comes from geopolitical risks, noted as high by ANZ Research. Tensions persist in the Middle East, where Israeli forces are engaging with Hamas militants in Gaza, including Rafah. Despite ongoing ceasefire negotiations mediated by Qatar and Egypt, the conflict remains unresolved with no immediate end in sight.
However, the International Energy Agency (IEA) has slightly reduced its forecast for global oil demand growth in 2024, predicting an increase of 1.1 million barrels per day, which is 140,000 bpd lower than its previous estimate, primarily due to reduced demand in OECD countries. This adjustment has somewhat limited oil price gains, illustrating the complex interplay of market forces impacting oil pricing.
(By Commoditiescontrol Bureau: 09820130172)
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