Oil prices saw an uptick on Wednesday, buoyed by optimistic global demand projections from the U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC). This was further supported by industry data revealing a larger-than-expected drop in U.S. crude oil inventories last week.
As of 0630 GMT, Brent crude futures climbed 50 cents, or 0.6%, reaching $82.42 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures rose 62 cents, or 0.8%, to $78.52 per barrel.
The EIA adjusted its 2024 world oil demand growth forecast upwards to 1.10 million barrels per day, up from the previous estimate of 900,000 barrels per day. OPEC maintained its forecast for robust global oil demand growth in 2024, driven by anticipated increases in travel and tourism during the latter half of the year.
This positive outlook follows a more than 2% decline in oil prices last week, after OPEC and its allies announced plans to phase out production cuts starting in October.
“Crude oil prices edged higher as OPEC maintained its forecasts for strengthening demand,” ANZ analysts noted, attributing the expected demand surge to China and other emerging economies. They added, “Despite announcing last week that it will start to phase out some of the voluntary cuts later this year, its forecasts suggest it should be easily accepted by the market.”
U.S. crude oil inventories decreased by 2.428 million barrels in the week ending June 7, according to market sources citing American Petroleum Institute data. This decline exceeded analysts’ expectations polled by Reuters.
The EIA, the U.S. government’s statistical arm, is set to release its data at 10:30 a.m. EDT (1430 GMT) on Wednesday.
Investors are also anticipating the U.S. Consumer Price Index report, due before the market opens on Wednesday, and the Federal Reserve’s policy announcement, expected later the same day.
“Expectations for a dovish Fed at the upcoming meeting should support the oil upside momentum today,” said Tina Teng, an independent market analyst, suggesting that a dovish stance would stimulate economic growth and boost oil demand. However, she cautioned, “the global economic slowdown could remain a bearish factor in the long term.”
In China, the world’s largest crude importer, consumer inflation held steady in May, while producer price declines eased. This indicates that Beijing may need to take further measures to stimulate domestic demand and support an uneven economic recovery.
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