Oil prices surged as Brent crude oil rose to $82.20 a barrel, a significant uptick amidst bullish sentiments driven by robust global demand forecasts.
The rally was fueled by expectations of strong consumption, particularly in the United States, the world’s largest oil consumer.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its projection of robust oil demand growth, estimating an increase of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025.
Also, OPEC revised its economic growth forecast upwards for the current year, adding to the positive market sentiment.
Further supporting the rally were reports of declining U.S. crude oil inventories and fuel stocks, indicating healthy demand dynamics in the market.
This news countered concerns raised by the unexpected increase in domestic oil output forecast by the U.S. Energy Information Administration.
Analysts anticipate the Federal Reserve to commence rate cuts despite solid U.S. consumer price increases in February.
Lower rates typically stimulate economic activity and fuel demand for oil, contributing to the buoyant market outlook.
Yeap Jun Rong, a market strategist at IG, highlighted the unwavering optimism in the risk environment, underpinned by the belief that current market expectations for a rate cut in June would suffice to support economic growth.
Despite challenges posed by increased U.S. oil output forecasts, the market remains resilient, bolstered by OPEC’s optimistic demand projections and ongoing geopolitical tensions, including recent drone attacks on Russian infrastructure.
As oil prices continue to climb, stakeholders closely monitor market dynamics and anticipate further developments in global demand and supply trends.