Oil Prices Rise on Strong Demand Signals and Geopolitical Uncertainty
Positive Data Boosts Oil Prices
Strong Demand Indicators
Oil prices saw an uptick on Friday as encouraging data from both the U.S. and China highlighted increased demand. The ongoing Gaza conflict added to the uncertainty, supporting the price surge.
China’s Role in Demand Surge
China’s Growing Appetite for Oil
China’s oil imports in April exceeded last year’s figures, indicating a positive trend in trade activity. This growth, coupled with rising refinery output and falling inventories, pointed to a robust demand scenario.
Price Movement and Weekly Gains
Steady Price Increase
Global benchmark Brent crude rose by 0.6% to $84.41 a barrel, with a weekly gain of 1.7%. Meanwhile, U.S. West Texas Intermediate crude climbed by 0.7% to $79.84, showcasing a weekly increase of 2.2%.
China’s Economic Recovery
Resilience in Chinese Demand
The return to growth in China’s exports and imports in April after a recent dip signified a revival in demand. This boded well for global commodity markets, indicating strong support.
Geopolitical Unrest and Supply Concerns
Risks of Supply Disruption
The ongoing conflict in Gaza kept global markets on edge, with the possibility of supply disruptions looming. As Israel engages in military actions, tensions escalate in the region, potentially involving other Middle Eastern countries like Iran.
Future Price Trends
Forecasted Price Movements
Analysts predict a gradual easing of prices throughout 2024, with Brent averaging at $86 a barrel in the second quarter and $74 in the third. This projection factors in a moderation in global oil demand growth.
Still, the bank’s analysts see prices easing through 2024, with Brent averaging $86 a barrel in the second quarter and $74 in the third quarter amid looser supply and demand fundamentals as there are signs that global oil demand growth “appears to be moderating”.
