Oil prices up following strong demand outlook

Oil prices spiked on Wednesday following data released late Tuesday by the Organization of Petroleum Exporting Countries (OPEC) and the American Petroleum Institute indicating a positive demand outlook, Azernews reports, citing Anadolu Agency.

International benchmark Brent crude traded at $82.22 per barrel at 10.44 a.m. local time (0744 GMT) for a 0.36% increase from the closing price of $81.92 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $77.83 per barrel at the same time, a 0.35% rise from the previous session that closed at $77.56 per barrel.

Oil prices increased after OPEC's monthly oil market report revealed that the global oil demand growth forecast for 2024 remains unchanged from last month's assessment of 2.2 million barrels per day (bpd) year on year.

According to OPEC, total global oil demand is projected to reach 104.5 million bpd this year, "supported by strong air travel demand and increased road mobility, including on-road diesel and trucking, as well as healthy industrial, construction, and agricultural activities, particularly in non-OECD countries.”

Markets interpreted this forecast positively and supported upward price movements.

Meanwhile, the American Petroleum Institute (API) late Tuesday announced a decrease of 5.5 million barrels in US crude oil inventories, against the market expectation of a draw of 400,000 barrels.

The US, the world's top oil consumer, saw a decline in its commercial crude oil reserves, which reinforced the perception that domestic demand remains strong enough to drive up oil prices.

The US Energy Information Administration's (EIA) data on oil stocks will be announced later on Wednesday, and if the stock decline is confirmed to be lower than estimates, prices could rise further.

Despite data released Tuesday indicating US inflation exceeded expectations, market anticipation that the US Federal Reserve (Fed) will begin rate cuts in June supported oil price rises.

However, economic uncertainties, especially concerns over weak economic data from China, the world's second-largest oil consumer, which is negatively affecting oil demand, have limited upward price movements.