Brent futures for May delivery rose by 46 cents, or 0.6%, reaching $82.38 per barrel, while the April U.S. West Texas Intermediate crude contract gained 47 cents, or 0.6%, reaching $78.03
Oil prices experienced an increase on Wednesday due to expectations of strong global demand, particularly in the United States, the world’s leading consumer. Despite a slight rise in U.S. inflation, it did not significantly impact the anticipation that the Federal Reserve might soon begin cutting rates.
By 0400 GMT, Brent futures for May delivery rose by 46 cents, or 0.6%, reaching $82.38 per barrel. Additionally, the April U.S. West Texas Intermediate crude contract gained 47 cents, or 0.6%, reaching $78.03.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its projection of robust global oil demand growth, estimating an increase of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025. Furthermore, OPEC raised its economic growth forecast for this year.
Further supporting the notion of healthy demand, market sources citing American Petroleum Institute figures revealed a decline in U.S. crude oil inventories and fuel inventories last week.
Despite the solid rise in U.S. consumer prices in February, driven by increased gasoline and shelter costs, analysts still anticipate that the Federal Reserve may commence rate cuts in the summer. This suggests a level of persistence in inflation. Lower rates typically boost oil demand.
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, said Yeap Jun Rong, market strategist at IG.
The unexpected slide in U.S. crude inventories and strong growth forecasts by OPEC also supported prices, said Yeap.
In a client note, analysts at Capital Economics maintained their forecast that the Federal Reserve would begin easing policy “around June.”
In the previous session, oil prices faced downward pressure following the U.S. Energy Information Administration’s raised forecast for domestic oil output. However, the impact was limited due to expectations that OPEC+ output cuts would continue to slow global oil growth.
