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15 March 2024 | FXGT.com
Crude Oil prices surge above $80 driven by supply constraints and increased demand expectations.
- Weekly Oil Market Update: Crude oil prices have surged over 3% this week, boosted by the International Energy Agency (IEA)’s upward revision of its 2024 oil demand forecasts and an unexpected drop in U.S. inventories.
- IEA’s Forecast Adjustment: The IEA has revised its 2024 oil demand projection upwards for the fourth time since November, anticipating a demand increase of 1.3 million barrels per day (bpd). This adjustment contributes to a forecasted supply deficit for the year, marking a shift from earlier surplus predictions.
- U.S. Stockpile Reduction: Contributing to the bullish sentiment, U.S. crude oil stockpiles unexpectedly dropped last week, for the first time in seven weeks, as reported by the Energy Information Administration (EIA). This reduction was attributed to increased refinery processing and a drop in gasoline inventories, indicating rising demand.
- Strong Demand from China: Optimism regarding China’s economic recovery and demand for oil contributes to the bullish sentiment. China’s central bank’s decision to leave a key policy rate unchanged reflects a focus on currency stability.
- Impact of Geopolitical Tensions: Oil prices this week were also influenced by Ukrainian strikes on Russian oil refineries, highlighting the ongoing geopolitical tensions affecting the energy sector.
- Impact of Houthi Attacks: The recent Houthi attacks on shipping routes in the Red Sea have disrupted standard maritime paths, compelling oil tankers to opt for longer detours around the Cape of Good Hope. This not only increases fuel consumption but also delays oil supplies.
- OPEC+ Supply Cuts: Decisions by OPEC+ to extend supply reductions have played a crucial role in supporting oil prices amid ongoing geopolitical tensions in the Middle East.
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