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Crude Oil Gains Buoyed By Hopes Of Rising Fuel Demand This Summer

Published 12-06-2024, 02:52 pm
© Reuters Crude Oil Gains Buoyed By Hopes Of Rising Fuel Demand This Summer
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Yesterday, crude oil prices rose by 0.62% to settle at 6,526, driven by optimistic expectations of increasing fuel demand during the summer season, despite the challenges posed by a stronger US dollar and the anticipation of prolonged high interest rates by the Federal Reserve. Analysts from Goldman Sachs (NYSE:GS) predict Brent crude will climb to $86 per barrel in the third quarter, attributing this to robust summer transport demand, which they believe will push the oil market into a third-quarter deficit of 1.3 million barrels per day (bpd). In the United States, there is speculation that the government may accelerate the replenishment of the Strategic Petroleum Reserve, targeting a buy-back price of around $79 per barrel.

 Meanwhile, OPEC has maintained its forecast for strong global oil demand growth, projecting a rise of 2.25 million bpd in 2024 and 1.85 million bpd in 2025, supported by travel and tourism in the latter half of the year. US crude oil inventories saw an unexpected increase of 1.233 million barrels in the week ending May 31, 2024, against market expectations of a 2.30 million barrel decline, according to the EIA Petroleum Status Report. Additionally, crude stocks at the Cushing, Oklahoma delivery hub rose by 854,000 barrels, reversing the previous week’s draw of 1.766 million barrels. Gasoline stocks also surged by 2.102 million barrels, surpassing the expected 1.95 million barrel rise, and distillate stockpiles increased by 3.197 million barrels, above the forecasted 3.01 million.

Technically, the crude oil market is undergoing short covering, as evidenced by a 4.58% decrease in open interest to 7,078 contracts while prices increased by 40 rupees. Currently, crude oil finds support at 6,474, with a potential test of 6,421 if this support level breaks. On the upside, resistance is expected at 6,566, and a move above this level could see prices testing 6,605.

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