Oil's rally above $77/barrel continues, with a weekly gain of 4% & up 0.17% on the day
WTI Crude oil futures experienced slight pressure in mid-Asia electronic trades following a rise to two-and-a-half-month highs of $77.33 a barrel. The gains were driven by a drop in the US dollar, which fell below the 100 mark, reaching its lowest level since April 2022. The decline in the dollar was triggered by cooling inflation numbers in the US, the world's largest oil-consuming nation.
Although the core producer price index in June increased by 0.1 percent after a revised 0.4 percent decline in May, the annual rate of producer price growth slowed to 0.1 percent in June from a revised 0.9 percent in May. The international oil futures benchmark contract traded at $76.65 a barrel, down 0.31%, but still on track to end the week with gains of over 5%. The commodity has risen by a significant 20% from its low of $63.64 on May 4th.
The cooling inflation numbers alleviated concerns about demand from the world's largest oil consumer. The oil rally was driven by the relaxing demand worries and the expectation of the Federal Reserve's completion of monetary policy adjustments or a potential year-end rate hike. Anticipated production cuts by Saudi Arabia and Russia are expected to tighten supply conditions and drive up oil prices.
Despite economic challenges, OPEC maintains a positive outlook for global oil demand, with an increased growth forecast for 2023. The organization predicts a slight slowdown in 2024, but remains optimistic due to the expanding fuel use in China and India. According to OPEC's monthly report, world oil demand is projected to increase by 2.25 million barrels per day in 2024, compared to 2.44 million barrels per day in 2023. The forecast for 2023 demand growth has been raised by 90,000 barrels per day
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