Oil Prices Rise on Positive Demand Outlook
Oil prices climbed due to positive demand expectations in top two world crude oil consumers – the United States, China. While demand outlook provides first support that propelled surge in the global energy costs, U.S dollar also weakened, raising demand level in the global commodities market on Thursday.
Brent crude rose by 0.2% to $74.85 per barrel while The US benchmark West Texas Intermediate (WTI) increased by 0.3% to $71.76 per barrel.
Uncertainty surrounding the actions of the incoming U.S. administration and the roadmap the Federal Reserve (Fed) will follow this year continues to influence the oil markets.
The concern of recession and inflation worldwide also affects asset prices. Expectations of increased fossil energy investments in the US, the world’s largest oil-consuming country, driven by the policies of US President-elect Donald Trump set to take effect on Jan.20, are supporting price increases.
The American Petroleum Institute (API) reported a drawdown in US commercial crude oil inventories for the week ending Dec. 27.
API data indicated a 1.4 million barrel decline, though it remained below market expectations of a 3 million barrel fall. The drop in stocks suggests strengthening demand in the US, the world’s largest oil consumer.
The US Energy Information Administration will release official inventory data later on Thursday. The weakening of the US dollar against other currencies aided the rise in oil prices. The weak dollar is expected to enhance demand by making oil cheaper for those who use foreign currencies.
The US dollar index, which measures the US dollar’s value against other currencies, fell 0.15% to 108.135. Expectations of economic growth in China, the world’s largest crude importer, are driving demand growth projections and influencing upward price movement.
China’s President Xi Jinping on Tuesday called for national ‘strategic resolve’ to weather ‘dangerous storms’ as the world’s second-largest economy was on its path to grow at around 5%.
In a separate New Year message, Xi said: ‘The economy has rebounded and is on an upward trajectory, with the national GDP expected to pass the mark of 130 trillion yuan or about $18.08 trillion and the country’s grain output surpassing 700 million tons.’ #Oil Prices Rise on Positive Demand Outlook CBN Opens FX Window for BDC to Stock up at NFEM Rate
