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Oil Prices Witness Uptrend As World’s Top Consumers Boost Demand

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Oil prices experienced an upward trend on Friday, fueled by heightened demand from the largest consumers globally, notably the United States and China, alongside optimistic signals from the U.S. Federal Reserve regarding potential rate adjustments.

At 0700 GMT, Brent crude futures climbed by 0.7%, or 58 cents, reaching $83.54 per barrel. Concurrently, U.S. West Texas Intermediate crude futures saw a 0.9% increase, or 69 cents, hitting $79.62.

Although both contracts saw slight declines earlier in the week, with Brent and WTI dropping by 0.1% and 0.5%, respectively, recent data from the Energy Information Administration revealed a significant decrease in U.S. gasoline inventories by 4.5 million barrels and distillate stockpiles by 4.1 million barrels, surpassing expectations and indicating robust demand.

“With the U.S. driving season just on the horizon, the market could get even tighter in coming weeks,” noted ANZ Research.

In China, crude oil imports surged by 5.1% in the first two months of 2024 compared to the previous year, while India witnessed a 5.7% increase in fuel consumption in February, driven by strong factory activity in the third-largest oil importer and consumer globally.

However, experts caution that growth rates may slow compared to 2023 due to reduced restrictions related to COVID-19, which led to a surge in transportation and travel activities.

Supporting oil prices further, Federal Reserve Chair Jerome Powell suggested on Thursday that the central bank was nearing sufficient confidence to consider interest rate cuts, easing concerns about inflation.

Commenting on the market dynamics, Yeap Jun Rong, a market strategist at IG, highlighted that Powell’s remarks, coupled with weakness in the U.S. dollar, have provided support to oil prices, albeit falling short of initial hawkish expectations.

Additionally, in Canada, TC Energy’s Keystone oil pipeline resumed operations after a temporary shutdown, restoring a crucial conduit for Canadian oil exports to the United States, which contributed to supporting prices in the previous session.