November 15, 2023 (MLN): Global oil prices surged on Wednesday, driven by strong data on China's factory output and retail sales for October, coupled with positivity from the International Energy Agency (IEA) raising its oil demand growth forecast.

Brent crude is currently trading at $82.54 per barrel, up by 0.42% on the day.

While West Texas Intermediate crude (WTI) is trading at $78.38 per barrel, up by 0.39% on the day.

China's October economic activity perked up as industrial output grew at a faster pace and retail sales growth beat expectations, an encouraging sign for the world's second-largest economy.

The most recent inflation data from the United States, one of the world's leading oil importers, reveals a 3.2% year-on-year increase in the Consumer Price Index (CPI) for October 2023. This marks a slight decline from the 3.7% year-on-year figures reported in September.

Meanwhile, on a sequential basis, US CPI remained unchanged with 0% MoM as compared to 0.4% in the previous month.

Consumer prices rose at a slower-than-expected pace, wherein the market was expecting 3.1% YoY and 0.1% MoM.

Oil prices and interest rates have an inverse relationship, as in an environment of rising interest rates economic activity contracts and oil demand dampens.

The IEA joined the Organization of the Petroleum Exporting Countries and its allies (OPEC+) in raising the oil demand growth forecast for this year, despite projections of slower economic growth in many major countries, as Reuters reported.

"It (IEA) sees oil demand remaining healthy. It raised its forecast due to better-than-expected consumption in China," ANZ Research said in a note on Wednesday.

Expectations that the U.S. Federal Reserve could cut interest rates next spring sent the U.S. dollar (.DXY) down to a two-and-a-half-month low against a basket of other currencies. A weaker dollar can boost oil demand by making crude cheaper for buyers using other currencies.

The U.S. Energy Information Administration (EIA) will release its first oil inventory report in two weeks on Wednesday. EIA did not release a storage report last week due to a systems upgrade.

Copyright Mettis Link News

Posted on: 2023-11-15T10:34:46+05:00