Crude Oil Prices Increase over Tight Supply Outlook
Oil prices increased on expectation that Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, would continue production cuts.
International benchmark Brent crude traded at $84.02 per barrel, an increase of 0.42% from the closing price of $83.67 per barrel in the previous trading session.
American benchmark West Texas Intermediate traded at $79.28 per barrel at the same time, a 0.42% rise from the previous session that closed at $78.95 per barrel.
Oil prices plummeted to the lowest levels in the past seven weeks, with reduced supply risks in the Middle East due to cease-fire negotiations between Israel and Hamas, while projected demand dwindled over concerns about the US economy after the US Federal Reserve left the interest rate policy unchanged.
Higher prices were, however, bolstered by the possibility that the OPEC+ group, led by Saudi Arabia and Russia, would continue to reduce production.
The price declines come just weeks ahead of the OPEC+ group meeting on June 1. Experts predict that if oil demand does not improve by June, OPEC, which needs higher prices, could agree to sustain its voluntary production cuts of 2.2 million barrels per day.
The Organization for Economic Cooperation and Development (OECD) on Thursday revised upwards its global GDP growth forecast for 2024 and 2025.
Elsewhere, OECD Raises Global Economic Growth Forecast
Global economy is projected to grow by 3.1% this year and 3.2% next year, led by stronger real income growth and lower policy interest rates, according to the May Economic Outlook.
“The global economy has proved resilient, inflation has declined within sight of central bank targets, and risks to the outlook are becoming more balanced. We expect steady global growth for 2024 and 2025, though growth is projected to remain below its longer-run average,” OECD Secretary-General Mathias Cormann said.
The divergence across economies continues with weaker outcomes in numerous advanced economies, especially in Europe, and strong growth in the US and several other emerging-market (EM) economies.
The GDP in the US is foreseen to increase by 2.6% in 2024 and 1.8% in 2025 as the economy adapts to high borrowing costs and moderating domestic demand.
Euro area GDP growth is projected at 0.7% this year and 1.5% next year thanks to a recovery in real household incomes, tight labor markets and reductions in policy interest rates.
The OECD expects China’s GDP growth to come in at 4.9% in 2024 and 4.5% in 2025, as the economy is supported by fiscal stimulus and exports.
Headline inflation in the OECD is projected to gradually ease from 6.9% last year to 5.0% this year and 3.4% next year, helped by tight monetary policy and fading goods and energy price pressures.
The OECD projects inflation to be back on central bank targets in most major economies by the end of 2025. Inflation Pressures Facing Private Sector Ease in April -PMI
