Oil up thanks to growing demand from major consumers

Oil prices rose on Friday, driven by growth in demand in the United States and China, the world’s largest oil consumers, coinciding with the Federal Reserve (the US central bank) giving a positive signal about the possibility of lowering interest rates.

According to Reuters, Brent crude futures rose 0.7%, or 58 cents, to $83.54 a barrel by 0700 GMT, while US West Texas Intermediate crude futures increased 0.9%, or 69 cents, to $79.62. However, crude futures fell slightly since the beginning of the week, with Brent falling 0.1 percent and US crude falling 0.5 percent.

Data issued by the Energy Information Administration showed that gasoline stocks in the United States fell by 4.5 million barrels last week, and distillate stocks fell by 4.1 million barrels. Both fell more than expected, reflecting strong demand.

“With the driving season approaching in the United States, the market may witness greater tightness in the coming weeks,” ANZ Research said in a note.

In China, crude oil imports rose 5.1% in the first two months of 2024 compared to the previous year. Fuel consumption in India increased 5.7% year-on-year in February amid strong factory activity in the world’s third-largest oil importer and consumer.

Capital Economics Research said in a note that after accounting for the extra day in February this year, China’s crude oil imports rose 3.3% year-on-year, which is in line with expectations of increased demand for this year.

Oil prices received additional support from the US Central Bank Chairman’s statement on Thursday that the bank is “not far away” from building sufficient confidence that inflation is declining, in preparation for starting to reduce interest rates.