May 11, 2023 (MLN): Oil prices rebounded in the early Asia trading session on Thursday driven by stronger fuel demand data from the U.S.
This increase comes after both benchmarks fell by almost 1% in the last session.
Brent crude climbed +0.53% to $76.9 a barrel, while U.S. West Texas Intermediate (WTI) rose 0.49% to $73.06 a barrel.
The surge in prices came as a result of a sharper-than-expected drop in U.S. gasoline inventories, indicating stronger demand for transportation fuels in the country.
Yeap Jun Rong, a market strategist at IG, noted that although Brent crude managed to regain some ground after being oversold, concerns surrounding global banking uncertainties hindered further progress, as Reuters reported.
Ongoing downside risks to global growth conditions could squeeze prices into a range moving forward, with the need for a more concrete catalyst for another push higher, he added.
Additionally, the latest U.S. inflation data released yesterday showed consumer prices rose in April, although easing on a YoY basis, but the MoM change gives the Federal Reserve more room for tightening, which can affect oil demand.
Meanwhile, the latest data from the U.S. Energy Information Administration (EIA) showed that the U.S. gasoline inventories fell by 3.2 million barrels last week, much more than the 1.2m barrel estimated by analysts.
Moreover, market participants are also monitoring detailed talks on raising the U.S. government's $31.4 trillion debt ceiling that kicked off on Wednesday, with Republicans continuing to insist on spending cuts.
Both Biden and House of Representatives Speaker Kevin McCarthy engaged their aides in daily discussions to explore areas of potential agreement, as a default becomes a looming possibility as early as June 1.
