June 22, 2024
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OIL & GAS

Oil Holds above $84 amid Growing Demand

Oil prices maintained their position above $84 per barrel on Friday, sustained by indications of increasing demand from the United States and China, the world’s top two consumers of crude oil.

Simultaneously, ongoing conflicts in the Middle East provided further support to oil prices.

According to Reuters, Brent futures saw an uptick of 33 cents, reaching $84.21 per barrel, as of 1314 GMT. Similarly, U.S. West Texas Intermediate crude rose by 42 cents to $79.68.

The rise in oil prices coincided with reports of diminishing U.S. crude inventories due to heightened refinery operations.

Additionally, recent data revealed that China’s oil imports in April surpassed those of the previous year, indicating a positive trend in demand. China also reported growth in both exports and imports for April, rebounding from a contraction the month before.

Market attention now turns to U.S. inflation data scheduled for release next week, which could influence the Federal Reserve’s approach to interest rates. Meanwhile, the European Central Bank is increasingly expected to commence rate cuts in June.

In Europe, tensions escalated as a Ukrainian drone attack ignited a fire at an oil refinery in Russia’s Kaluga region, according to reports from the RIA state news agency. The incident adds to a series of retaliatory strikes on energy infrastructure between the two countries.

Conflict persisted in the Middle East as Israeli forces reportedly conducted airstrikes in the southern Gaza city of Rafah on Thursday, following stalled negotiations to cease hostilities.

Concerns linger over the potential for broader regional escalation, particularly involving Iran, a supporter of the Palestinian group Hamas and a significant oil producer.

“Israel’s groundwork for an intervention in Rafah and growing tensions on its northern border are a reminder that geopolitical risks could persist through all of Q2 2024, at least,” Citi analysts said in a note.

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