© Reuters. FILE PHOTO: A petrol station worker prepares to refuel a car in Rome, Italy January 4, 2012. REUTERS/Max Rossi/File Photo
by Scott DiSavino
NEW YORK (Reuters) – Oil prices jumped on Tuesday, settling around 2 percent, supported by a weaker US dollar and hopes of increased demand in the developing world and supply cuts by the world’s top oil exporters.
Futures rose $1.71, or 2.2%, to settle at $79.40 a barrel. US West Texas Intermediate crude rose $1.84, or 2.5 percent, to settle at $74.83.
Brent settlement was the highest since April 28, while WTI settlement was the highest since May 1. Brent crude was technically overbought for the second time in three days.
“The break of the recent rally can be seen as an upward move that could give (Brent) the impetus to break the $80 level,” said Craig Erlam, senior market analyst at OANDA. “The rally still has momentum at this stage,” he added.
US diesel futures were also on track for their highest close since April 18th.
The US dollar fell to a two-month low against a basket of other currencies on the day after several Federal Reserve officials indicated that the US central bank is nearing the end of its tightening cycle.
A weak dollar makes crude oil cheaper for holders of other currencies.
Small business confidence in the United States rose to a seven-month high in June as pessimism about the economic outlook waned sharply and sales expectations improved, but a still-tight job market continued to fuel concerns about inflation.
Markets await US inflation data on Wednesday, looking for clues to the interest rate outlook. Higher rates can slow economic growth and reduce demand for oil.
The International Energy Agency (IEA) said the oil market should remain tight in the second half of 2023, citing strong demand from China and developing countries along with recently announced supply cuts, including by top exporters Saudi Arabia and Russia.
The International Energy Agency will publish new forecasts this week.
The Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) said that global energy demand is expected to increase by 23% by the end of 2045.
Record supply and demand for oil in the world
The US Energy Information Administration (EIA) expects global oil production to rise from 99.9 million barrels per day in 2022 to 101.1 million barrels per day in 2023 and 102.6 million barrels per day in 2024, while global demand will rise from 99.4 million barrels per day in 2022. to 101.2 million barrels per day in 2023 and 102.8 million barrels per day in 2024.
That compares with a record 100.5 million barrels per day of global oil production in 2018, and a record of 100.8 million barrels per day of global fluid consumption in 2019.
The Energy Information Administration also expected production to rise from 11.9 million barrels per day in 2022 to 12.6 million barrels per day in 2023 and 12.9 million barrels per day in 2024, while US liquid consumption will rise from 20.3 million barrels per day in 2022 to 20.4 million barrels per day in 2023 and 20.8 million barrels per day in 2024.
This compares with a record 12.3 million barrels per day of US crude production in 2019, and a record 20.8 million barrels per day of liquids consumption in 2005.
The market is awaiting US oil inventory data from the American Petroleum Institute (API), an industry group, on Tuesday and the EIA on Wednesday.
In light of the expectation of analysts in a Reuters poll, an increase of 0.5 million barrels in US crude stocks during the week ending on the seventh of July (July), the inventory data may affect the oil markets. (EIA/S) (API/S)
If correct, it would be the first crude stockpile in four weeks and compares to an increase of 3.3 million barrels in the same week last year and a five-year average decline (2018-2022) of 6.9 million barrels.