The benchmark crude WTI (CM:CL) rallied by over 4% this week as rising global uncertainties took center stage. Aiding this rise was a bullish U.S. inventory report from the EIA (Energy Information Administration).
Global Uncertainties
Global geopolitical uncertainties are on the rise after Yemen’s Houthi rebels sunk a second ship in the Red Sea. The specter of escalating tensions between Israel and Hezbollah adds more geopolitical risk premium to oil prices. Additionally, a drone strike from Ukraine impacted an oil terminal in Russia’s port of Azov. These developments have helped oil prices steadily climb this month.
Numbers from the EIA
Aiding this rise was the latest inventory report from the EIA for the week ended June 14. During this period, crude inventories in the U.S. declined by 2.55 million barrels and gasoline inventories decreased by 2.3 million barrels. The decline comes after consecutive weekly gains in U.S. stockpiles. Additionally, the numbers point to an impact from summer driving demand.
OPEC’s Demand Expectations
Another factor driving the oil rally is a robust demand outlook for the remainder of 2024. OPEC estimates global oil demand to rise by 2.25 million barrels a day this year and by 1.85 million barrels a day next year. This implies healthy demand in H2 2024 on the back of strong economic growth globally.
What Is the Outlook for Oil
Together, these factors have driven crude oil prices from around $72 at the beginning of June to the current $81 level, and it looks like this price strength could continue. The TipRanks Technical Analysis tool is flashing a Strong Buy signal for oil on a monthly time frame.
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