Oil prices surged on Friday as Brent crude surpassed $83 per barrel and U.S. West Texas Intermediate (WTI) hit $79, driven by robust demand from major consumers like the United States and China.
The increase came amid positive signals from the U.S. Federal Reserve regarding potential rate cuts, further bolstering market confidence.
Brent crude futures rose by 0.7%, or 58 cents to $83.54 a barrel while U.S. West Texas Intermediate crude futures jumped 0.9%, or 69 cents to $79.62.
Despite minor declines earlier in the week, both contracts demonstrated significant gains.
The Energy Information Administration reported a notable decrease in U.S. gasoline inventories by 4.5 million barrels and distillate stockpiles by 4.1 million barrels, surpassing expectations and signaling robust demand.
With the U.S. driving season on the horizon, analysts anticipate further tightening of the market in the coming weeks.
In China, crude oil imports surged by 5.1% in the first two months of 2024 compared to the same period last year, while India posted a 5.7% increase in fuel consumption in February amid strong factory activity.
Despite this growth, expectations suggest a more moderate expansion compared to the previous year due to lower restrictions and activity levels related to the COVID-19 pandemic.
Federal Reserve Chair Jerome Powell’s remarks on potential interest rate cuts also provided additional support to oil prices.
Powell stated that the central bank was nearing a point where it could consider reducing rates, further boosting market sentiment.
Overall, the positive demand outlook, coupled with supportive market factors, contributed to the significant surge in oil prices, reflecting renewed optimism in the energy market.