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Published: May 15, 2024
Updated: May 15, 2024

Oil Prices Surge on Strong Demand and Moderate US Inflation Data

Market Boosted by Signs of Stronger Demand

Oil prices continued their upward trajectory on Thursday, building on gains from the previous session. The surge was fueled by indications of stronger demand in the U.S., where data revealed slower inflation than anticipated. This bolstered expectations for a potential interest rate cut, which could further stimulate demand for oil.

Brent and WTI Futures Rise

Brent futures climbed by 0.5% to reach $83.17 a barrel, while U.S. West Texas Intermediate crude (WTI) saw a 0.6% increase, reaching $79.06 at 0032 GMT.

U.S. Consumer Prices and Inventories

U.S. consumer prices registered a lower-than-expected increase in April, fueling expectations for a Federal Reserve rate cut in September. This development could potentially weaken the dollar and enhance the affordability of oil for holders of other currencies. Additionally, data from the Energy Information Administration (EIA) indicated declines in U.S. crude oil, gasoline, and distillate inventories, reflecting a rise in refining activity and fuel demand.

Geopolitical Tensions and Ceasefire Talks

Geopolitical tensions, particularly in the Middle East, contributed to market dynamics. Israeli troops clashed with Hamas militants in Gaza, with ceasefire talks mediated by Qatar and Egypt reaching a stalemate. The situation remains tense, with Hamas demanding an end to attacks and Israel insisting on the group's annihilation.

IEA Forecast and Global Demand

Despite the positive market sentiment, gains were tempered by the International Energy Agency (IEA) revising its forecast for 2024 oil demand growth downward. The IEA anticipates global oil demand to grow by 1.1 million barrels per day, down from its previous estimate, primarily due to weak demand in developed nations.

Oil prices surged on the back of robust demand signals and moderate U.S. inflation data, supported by geopolitical tensions in the Middle East. However, concerns linger regarding global demand growth, as reflected in the IEA's revised forecast. As market dynamics evolve, investors will closely monitor developments to gauge the trajectory of oil prices in the coming days.