Reuters — Despite a nearly 2% rise in oil prices to $77 per barrel on Friday, WTI crude futures are poised for their third consecutive weekly fall. This increase mirrors the broader financial market’s recovery from the Federal Reserve’s hawkish remarks.
Concerns Over Supply and Demand
Worries about potential supply disruptions in the Middle East, along with uncertainties in US and Chinese demand, have contributed to the week’s downward trend. The EIA has stated that total petroleum consumption in the US is projected to drop by 300,000 bpd this year, a stark contrast to its previous forecast of a 100,000-bpd increase.
Surging US Crude Inventories
Recent data revealed a nearly 12-million-barrel surge in US crude inventories last week, marking the largest increase since early 2023.
China’s Demand Outlook
In China, the world’s leading crude importer, weaker-than-expected inflation and trade figures have negatively impacted the demand outlook.
While the rise in oil prices may seem beneficial, the potential for supply disruptions and uncertain demand could pose challenges. The surge in US crude inventories and weakened demand from China could signal a slowdown in the global economy. However, these trends might also represent necessary adjustments in response to changing market conditions. Ultimately, the impact on the economy will depend on how these factors evolve over time.