On Wednesday, oil prices soared after the US Department of Energy (DOE) predicted a petroleum shortfall in the third quarter.
The US West Texas Intermediate (WTI) July crude futures rose by 0.51% to $78.50 per barrel on June 12. However, market analysts predict a 0.15% decline to $77.38 in the coming trading session.
Likewise, Brent oil futures for August delivery jumped by 0.83% to $82.60 a barrel, erecting a three-day win streak. Nevertheless, commodity specialists foresee a 0.10% loss to $82.52 in the coming trading day.
Commodity prices surged after Hamas insisted on numerous changes regarding the US-backed proposal for an Israel-Gaza ceasefire. Secretary of State Antony Blinken described some of the requested amendments as unworkable, sparking fears of a prolonged war.
Meanwhile, Energy Information Administration inventories gained 3.73 million barrels in the week ending June 07, the highest in six weeks. The reading added to the accumulation of 1.23 million barrels the week before and contrasted with the anticipated 1.20-million-barrel contraction.
During the same week, the American Petroleum Institute posted a draw of 2.43 million barrels in crude oil stock. This reversed the prior week’s 4.05-million-barrel build and surpassed the forecasted reduction of 1.75 million barrels in the week ending May 31.
DOE Sees Soaring Oil Demand Overwhelming Output
According to the DOE, global oil demand will lift by 1.10 million barrels per day (bpd) this year, up from its earlier forecast of 900,000.00 bpd. Factoring the agency’s projected world production growth of 800,000.00 bpd, this would imply an annual supply deficit.
In line with this, insiders said Morgan Stanley told clients it projects a shortage of 1.20 million bpd in Q3. Similarly, OPEC+ reiterated its demand growth estimate of 2.20 million bpd, citing predictions of 2.80% global economic growth in 2024.
Lastly, the Federal Reserve limited the rise in oil prices after pausing the benchmark interest rate at 5.50% during its June meeting. According to commodity experts, higher borrowing costs constrict economic activity, reducing fuel consumption.