Oil prices surged on Wednesday as optimism regarding robust global demand, particularly from the United States, overshadowed concerns about inflation and potential rate cuts by the Federal Reserve. Brent futures for May delivery climbed 0.6% to $82.38 a barrel, while April U.S. West Texas Intermediate crude rose by a similar margin to $78.03.
The Organization of the Petroleum Exporting Countries (OPEC) reaffirmed its projection of strong oil demand growth, estimating an increase of 2.25 million barrels per day in 2024 and 1.85 million BPD in 2025. Additionally, OPEC raised its economic growth forecast for the current year, further bolstering market sentiment.
Market sources, citing figures from the American Petroleum Institute, reported a decline in U.S. crude oil and fuel inventories last week, indicating healthy demand dynamics.
Despite solid consumer price growth in February, attributed to higher gasoline and shelter costs, analysts anticipate the Federal Reserve might initiate rate cuts by summer to address inflation concerns, which could support oil demand.
Market strategist Yeap Jun Rong noted the resilience of the risk environment, driven by confidence in current market pricing for a potential rate cut in June.
The unexpected drop in U.S. crude inventories, coupled with OPEC’s optimistic growth forecasts, contributed to the upward trajectory of oil prices. Analysts at Capital Economics echoed the sentiment, projecting the Fed to consider easing policy around June.
Despite the previous session’s pressure on oil prices following the U.S. Energy Information Administration’s revised domestic oil output forecast, market declines were mitigated by expectations that OPEC+ output cuts would mitigate global oil oversupply.
Additionally, recent drone attacks on Russian facilities, including refineries, further supported price stability.
