Crude oil prices rose, at the end of trading today, Tuesday, May 9 (2023), after a volatile session, with optimism about fuel demand during the summer.
The market remained cautious ahead of the US April inflation data, which will be key to the next Fed rate decision.
And the US Energy Information Administration raised its expectations regarding the growth of global oil demand during the current year to 1.56 million barrels per day, compared to 1.44 million barrels per day in previous estimates.
Crude oil prices today
At the end of the session, Brent crude futures, for July 2023 delivery, rose 0.5%, to record $77.44 a barrel, after declining at $75.07.
US West Texas Intermediate crude futures, for June 2023 delivery, also rose 0.8%, to record $73.71 a barrel, according to data seen by the specialized energy platform.
Crude oil prices ended their trading, yesterday, Monday, May 8, with an increase of more than 2.5%, for the second session in a row, in an attempt to reduce the losses suffered during the past week.
Oil price analysis
“Crude oil prices have rebounded somewhat in the past couple of sessions so it’s time to pause… with no real positive data coming out,” said Suvru Sarkar, senior energy analyst at DBS Bank.
He added, “The market is cautious today ahead of the inflation data… and with net long positions declining sharply over the past two weeks, many traders are exiting the market, so trading volumes are low.”
US consumer price inflation figures for April are due out tomorrow, Wednesday, which determine the Federal Reserve’s stance on raising interest rates.
The Fed raised interest rates last week, while perhaps the latest hike in a tightening cycle, abandoning guidance on the need for future hikes, as inflationary pressure begins to abate.
A report released by the New York Federal Reserve on Monday showed that US consumers said, last month, that they expected a slight decline in inflation within a year.
demand for oil
While the oil markets fell sharply last week, and prices rose on Friday and Monday, as fears of a recession eased in the United States, the largest oil consumer in the world, some traders saw that the decline in crude oil for 3 weeks due to concerns about demand is exaggerated.
“The oil market has been extremely oversold and will likely continue to hold as long as Wall Street remains confident that the Fed will cut interest rates later this year,” OANDA senior market analyst Edward Moya said in a note.
A round of voluntary production cuts by some members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as the OPEC+ alliance, begins this month, and the organization holds its next meeting on June 4.
“Crude oil prices won’t be able to go much higher given all the demand growth concerns, but expectations are high for OPEC+ to try to keep prices above $70 a barrel,” Moya’s note said.
Also supporting crude oil prices, the Canadian province of Alberta declared a state of emergency over the weekend; In response to wildfires that have displaced nearly 30,000 people and prompted energy producers to shut down at least 280,000 barrels of oil equivalent per day, more than 3% of Canada’s production.
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