Oil Prices Surge to Highest Levels in Over a Month Amid Optimism on Demand.
U.S. West Texas Intermediate (WTI) crude futures climbed by $1.88, or 2.4%, to close at $80.33 a barrel, the highest since late April. Meanwhile, global benchmark Brent crude rose by $1.63, or 2%, to settle at $84.25 a barrel, also marking the highest since April.
The recent upward trend follows both benchmarks posting their first weekly gain in four weeks. This positive momentum was bolstered by reports from the OPEC+ producer group, the International Energy Agency (IEA), and the U.S. Energy Information Administration (EIA), all of which expressed confidence that oil demand will strengthen in the second half of the year, leading to a drawdown in inventories.
OPEC+’s reassurances played a crucial role in firming prices. The group indicated that their plan to increase supplies from the fourth quarter could be paused or reversed depending on market conditions. This plan, announced after their June 2 meeting, initially caused a sharp selloff but has since contributed to price stabilization.
“The outlook for strong fuel demand in the coming quarter and Saudi reassurance about the October hike being subject to prevailing conditions, along with added focus on quota breakers to align production, all seem to be supporting,” said Ole Hansen of Saxo Bank.
Investor sentiment was further buoyed as data from the Commodity Futures Trading Commission showed a repurchase of petroleum that had been sold the previous week.
“Those funds that anticipated a production battle were reassured when OPEC+ members launched a PR campaign to affirm that their production changes would be market-dependent,” noted Alex Hodes, an oil analyst at brokerage firm StoneX.
Additionally, economic data from China fueled hopes of stronger oil demand from the world’s top importer. Government data revealed a robust 9.6% growth in manufacturing investment in the first five months of the year. However, industrial output data lagged expectations.
Related Posts
Geopolitical factors also played a role in supporting oil prices. Analysts from AEGIS Hedging highlighted a rising geopolitical risk premium, particularly concerns of a broader Middle East conflict. This follows intensified cross-border fire from Lebanon’s Hezbollah movement into Israel, raising fears of serious escalation.
Overall, the combination of positive demand forecasts, strategic production adjustments by OPEC+, strong economic signals from China, and heightened geopolitical tensions have driven oil prices to their highest levels in over a month.
