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Monday, July 22, 2024

Oil prices rise as demand expected to increase in northern hemisphere

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In Short:

Oil prices rose on hopes for increased demand in the summer in the northern hemisphere, with Brent crude futures up by 0.4% to $82.95 a barrel and US WTI crude futures up by 0.3% to $78.70. China’s slower industrial output growth and decline in oil refining also affected prices. OPEC cuts, Saudi Arabia’s stance on output increases, and global gasoline demand trends are factors to watch.

A Positive Boost for Oil Prices This Summer

Hey there, oil enthusiasts! The good news is here – oil prices are on the rise on this beautiful Monday. The reason? Well, hopes are high for a surge in demand during the summer season in the northern hemisphere. Exciting, isn’t it?

Numbers Talk

As of 1212 GMT, the benchmark **Brent** crude futures decided to take a positive leap, climbing higher by 33 cents, which is a 0.4% increase, reaching an impressive $82.95 a barrel. On the other hand, **US West Texas Intermediate** crude futures also joined the party, adding 25 cents, a 0.3% rise, to hit $78.70.

China’s Impact

Traders are keeping an eye on China as well. Recent data from the powerhouse has shown slower growth in industrial output and fixed asset investment. Furthermore, oil refining took a hit as more refineries closed for maintenance, dropping to the lowest rate this year. China’s moves are definitely making ripples!

Recent Trends

Last week, both benchmarks received a boost thanks to optimistic expectations that oil inventories are set to decrease during the summer season in the northern hemisphere, all while OPEC (Organization of the Petroleum Exporting Countries) continues its supply cuts regimen.

Global Scenario

The current Brent oil prices stand at around $83 a barrel, down about 9% from mid-April. Meanwhile, **Saudi Arabia** has assured that OPEC’s planned output increase in the fourth quarter can be put on hold or reversed if necessary. This is a great display of flexibility!

Middle East Tensions

As if that wasn’t enough excitement, worries about the Middle East conflict persist. The Israeli military has raised concerns about intensified cross-border fire from Lebanon’s **Hezbollah** into Israel possibly sparking a serious escalation. Tensions are definitely running high!

Global Gasoline Demand Dive

Now, onto a concerning yet important aspect – global gasoline demand has taken a dip during the peak summer driving season. This decrease could potentially impact global crude oil demand in the foreseeable future.

In the US, gasoline demand stood at 9 million barrels per day (bpd) during the first week of June, marking a 1.7% decline compared to the previous year’s data. Additionally, this demand level is seasonally the lowest since 2021. The situation in Asia mirrors this weakness, with Asian refiners seeing their profits from producing gasoline from a barrel of Brent halving in the last week of May to about $4 per barrel.

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