The price of oil rises today: here are the reasons behind it
Oil Prices on the Rise: What’s Driving the Increase?
Oil prices are advancing for the third consecutive day, heading towards a weekly gain.
The Brent is trading above $84 per barrel after a two-day rally and remains above the 100-day moving average.
The West Texas Intermediate is approaching $80.
Factors Contributing to the Price Increase
Overall, prices remain higher this year, supported by supply cuts from OPEC+, the global demand recovery, and ongoing tensions in the Middle East.
The Organization of the Petroleum Exporting Countries and its allies will meet next month to decide on production levels for the second half of the year.
The latest geopolitical signals and macroeconomic data have driven prices higher in this final weekend.
The oil price is increasing for reasons related to China, the USA, and the Middle East.
Geopolitical and Macroeconomic Impact
While remaining at non-alarming levels, crude oil prices are on the rise due to recent geopolitical indications and macro data from major powers such as China and the USA.
In particular, the decline in US crude inventories, boosted by refinery increases, coincided with Thursday’s data showing that China’s oil imports in April were higher than last year, signaling improved business activity.
Chinese exports and imports returned to growth in April after the previous month’s contraction, indicating a boost in demand.
Recent signals of robust demand in China are expected to keep the commodity market well supported, as stated by ANZ Research.
Geopolitical Concerns in the Middle East
Efforts to end the fighting between Israel and Hamas have not yielded results, raising worries about potential supply disruptions in the Middle East.
Thursday saw Israeli forces bombing the city of Rafah in the Gaza Strip, according to Palestinian residents.
As the conflict persists, there is an increasing chance of involvement from other Middle Eastern countries, particularly Iran, a key supporter of Hamas and a major producer.
Analysts suggest that geopolitical risks may remain prevalent at least throughout the second quarter of 2024 due to ongoing tensions.
Despite current events, the bank analysts foresee a price decline until 2024, with Brent averaging $86 per barrel in the second quarter and $74 in the third quarter, amid looser supply and demand fundamentals.
