Crude oil futures rose on Wednesday as traders bet on tighter supplies later this year. The Federal Reserve said it would cut interest rates only once this year, and negative U.S. inventory data limited gains.
The Department of Energy believes global demand Production increased by 1.1 million barrels per day this year, higher than the previous forecast of 900,000 barrels per day. Increased demand means supply shortages, with world production expected to increase by 800,000 barrels per day in 2024.
Oil prices had risen nearly 2% earlier in the day, but retreated after the United States reported a 3.7 million barrel increase in crude inventories last week (analysts expected a 1 million barrel drop).
Gasoline inventories rose by 2.6 million barrels, above analysts’ expectations of 891,000 barrels. Fuel demand increased by 94,000 barrels per day, totaling approximately 9 million barrels per day. Although the summer driving season has begun, average daily fuel demand remains tepid, down 1.5% from the same period last year.
Oil prices fell further after the Federal Reserve said it would cut interest rates only once this year, instead of the three expected in March, citing “moderate” progress in curbing inflation.
Here are Wednesday’s closing energy prices:
- West Texas Intermediate Oil July contract: $78.50, up 60 cents, or 0.77%. U.S. oil prices have risen 9.5% so far this year.
- Brent August contract: $82.60 per barrel, up 68 cents, or 0.83%. Year to date, the global benchmark is ahead by 7.2%.
- RBOB gasoline July contract: $2.39 per gallon, down 0.6%. So far this year, gasoline prices are up 13.8%.
- natural gas July contract: $3.04/thousand cubic feet, down 2.68%. Natural gas prices are up 21% so far this year.
“In the short term, oil markets are likely to tighten,” Morgan Stanley commodities strategist Martijn Rats told clients in a note. The investment bank expects a deficit of 1.2 million barrels per day in the third quarter, which could Pushing Brent crude oil prices to $86 per barrel.
At the same time, as the global economy grows by 2.8% this year, OPEC maintains its demand growth forecast of 2.2 million barrels per day. These predictions are related to Bearish outlook The International Energy Agency sees weak demand and increasing supply.
WTI and Brent crude oil
Citi analysts described recent price action as range-bound, with volatility near decade lows. The bank also expects tightness in the third quarter due to summer fuel demand, although it expects OPEC+’s planned production increase to lead to a “bear market” in late 2024 and 2025, with Brent crude prices falling to $60 a barrel.
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