Brent crude oil and West Texas Intermediate (WTI) were both trading up over 2% on Monday as optimism strengthened over summer fuel demand prospects and despite the dwindling potential for the U.S. Federal Reserve to cut interest rates. On Monday at 12:06 p.m. EST, Brent crude oil was trading up 2.19% at $81.36, for a gain of $1.74 on the day, while the U.S. WTI benchmark was trading up 2.45% at $77.38, for a gain of $1.85 on the day. Monday saw the effects of a strong dollar rally late last week after the release of Friday’s U.S. jobs data, which some interpret as an indicator that we may be waiting longer for interest rate cuts from the Fed. Earlier in the day, Goldman Sachs had predicted that Brent would rise to $86 over the summer season on strong consumer demand, which in turn would lead to a significant supply deficit in the third-quarter of this year. “There is a growing conviction that demand will be buoyant as the summer driving season approaches leading to considerable stock draws,” he added. Tensions in Europe, including a falling euro, which suggest short-term instability with European Union elections, and the calling of French snap elections also appear to be providing some upwards momentum to oil prices.
OPEC: Oil demand growth forecast unchanged
The Organization of the Petroleum Exporting Countries (OPEC) estimated in its monthly report on Tuesday that the global oil demand will grow by 2.2 million barrels per day (bpd) in 2024, unchanged from the previous report. The growth will be driven by a rise in demand in China, India, the Middle East, and Latin America. OPEC said that total world oil demand is projected to reach 104.5 million bpd in 2024, “bolstered by strong demand for air travel and healthy road mobility, including trucking.” In 2025, the global oil demand should increase by 1.8 million bpd, same as in last month’s report.
The United States’ gross domestic product (GDP) is projected to grow by 2.2% this year and by 1.9%, unchanged from last month’s estimate. The Eurozone’s GDP was also left unchanged at 0.5% and 1.2% for 2024 and 2025 respectively. China is expected to see its economy grow by 4.8% this year, and 4.6% in 2025, matching the last forecast. Russia’s economic growth saw a positive revision, putting its GDP expansion at 2.9% for 2024, while the next year’s estimate remained at 1.4%. “Despite significant uncertainties remaining about the trajectory of key policy rate setting going forward, much will depend on the inflationary trend and the likely shift in focus by central banks, particularly in advanced economies, towards supporting economic growth,” OPEC underlined.