Oil prices experienced an uptick on Wednesday, driven by anticipated robust global demand, particularly in the United States, the world’s leading consumer. The persistence of moderate U.S. inflation failed to significantly alter expectations regarding the potential initiation of rate cuts by the Federal Reserve.
Brent futures for May delivery exhibited a 0.6% increase, or 46 cents, reaching $82.38 a barrel by 0400 GMT. Simultaneously, the April U.S. West Texas Intermediate crude contract rose by 0.6%, or 47 cents, reaching $78.03.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its projection of substantial global oil demand growth, anticipating an increase of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025, while also revising its economic growth forecast for the current year upwards.
Highlighting the strong demand, reports based on American Petroleum Institute figures indicated a decline in U.S. crude oil inventories and fuel inventories last week.
Despite solid U.S. consumer price increases in February, attributed to higher gasoline and shelter costs, analysts remain of the opinion that the Federal Reserve may commence rate cuts in the summer, potentially boosting oil demand. Yeap Jun Rong, a market strategist at IG, noted, “The risk environment has largely stayed unfazed, riding on the firm belief that current market pricing for a rate cut only in June will do the job.
Unexpected reductions in U.S. crude inventories, coupled with optimistic growth forecasts from OPEC, further bolstered oil prices, according to Yeap.
In a client advisory, analysts at Capital Economics maintained their prediction of the Federal Reserve implementing policy easing “around June.”
While oil prices faced pressure in the preceding session following an increased domestic oil output forecast by the U.S. Energy Information Administration, mitigating factors included expectations that OPEC+ output cuts would impede global oil growth, along with the recent surge in drone attacks on Russia, including refineries.