Oil rates see upward trend driven by robust demand data, supply concerns
Date
7/11/2024 5:16:31 AM
(MENAFN) On Thursday, oil rates saw an upward trajectory driven by a combination of factors including strong demand indicators from the US and supply constraints from OPEC amidst geopolitical tensions in the Middle East.
Brent crude, the global benchmark, traded at USD85.58 per barrel as of 10:41 a.m. local time (0721 GMT), reflecting a 0.59 percent increase from its previous close of USD85.08 per barrel. Similarly, West Texas Intermediate (WTI), the US benchmark, rose by 0.54 percent to USD82.54 per barrel from USD82.10 per barrel in the previous session.
The bullish sentiment was bolstered by the US Energy Information Administration's (EIA) report, which revealed a significant drop of 3.4 million barrels in US commercial crude oil inventories, far exceeding market expectations of a modest increase. Additionally, gasoline inventories decreased by approximately 2 million barrels to 229.7 million barrels, signaling robust demand in the largest oil-consuming nation.
OPEC's latest monthly report also contributed to market optimism, showing a reduction in crude oil production by 80,000 barrels per day (bpd) in June, lowering total output to 26.57 million bpd. The broader OPEC+ alliance, which includes non-OPEC producers, saw a combined production decline of 125,000 bpd to 40.80 million bpd. These production cuts underscored concerns about constrained supply levels, further supporting higher oil prices.
Meanwhile, geopolitical tensions in the Middle East continued to weigh on market sentiment. Despite ceasefire negotiations in Gaza, reports of Yemen's Houthi group targeting ships in the Arabian Sea and Gulf of Aden, including vessels from the US and Israel, added to concerns over potential disruptions to oil shipments. This geopolitical backdrop heightened market apprehensions and contributed to additional upward pressure on oil prices.
Overall, the combination of strong demand signals from the US, supply constraints from OPEC, and geopolitical uncertainties in the Middle East collectively influenced the bullish trend observed in oil markets on Thursday.
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