Brent Crude hovers above $84 as demand rises in US and China – Investors King

Brent crude continued its upward trajectory above $84 a barrel as demand from the United States and China, the world’s biggest crude consumers, picked up.

This increase in demand, along with geopolitical tensions in the Middle East, supported oil markets, keeping Brent crude above $84 a barrel.

The latest data showed a pick-up in demand, particularly in the US, where falling crude inventories coincided with higher refinery runs.

This trend points to rising consumption patterns and a positive outlook for oil demand in the world’s largest economy.

In China, oil imports for April topped last year’s figures, driven by signs of improving trade activity as exports and imports returned to growth after an earlier contraction.

Analysts at ANZ Research highlighted the continued strength of demand from China, suggesting this could keep commodity markets well supported in the near term.

Positive demand momentum from these key economies provided a significant boost to oil prices in recent trading sessions.

However, amid these upbeat indicators, geopolitical tensions in the Middle East added further support to oil markets. Reports of a Ukrainian drone strike that set fire to an oil refinery in Russia’s Kaluga region have heightened concerns about supply disruptions and escalating tensions in the region.

The ongoing conflict in the Gaza Strip has also fueled fears of wider unrest, particularly given Iran’s support for the Palestinian group Hamas.

Citi analysts highlighted the geopolitical risks facing the oil market, pointing to Israel’s actions in Rafah and rising tensions along its northern border. They warned that such risks could persist throughout the second quarter of 2024.

Despite the current upbeat sentiment, analysts anticipate a moderation in oil prices as global demand growth appears to moderate, with Brent crude expected to average $86 a barrel in the second quarter and $74 in the third.

The combination of robust demand from key economies such as the US and China, along with geopolitical tensions in the Middle East, continue to weigh on oil markets, with Brent crude hovering above $84 a barrel.

As investors closely monitor developments in both demand dynamics and geopolitical events, the outlook for oil prices remains subject to continued market volatility and uncertainty.