April 11, 2023 (MLN): Oil prices climbed on Tuesday, driven by expectations of lower U.S. crude stocks and strong demand from emerging markets.
The rise in Asian equity markets on the expectations of stable interest rates in the region’s central banks likely influenced the increase in crude futures, as reported by Reuters.
During the early Asia trading session, Brent crude futures surged by 0.57% to $84.53 per barrel, while U.S. West Texas Intermediate crude (WTI) increased by 0.58% to $80.33 per barrel.
Moreover, fuel consumption in India, the world’s third-largest oil consumer, rose by 5% in March from the previous year, setting a record of 4.83 million barrels per day, Reuters data showed, which supported the price surge. This increase is significant as India remains the primary market for Russian Urals crude amid the shift in global oil trade flows following the Ukraine invasion.
The recent announcement by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, to cut production starting in May has caused oil futures to rise by more than 5%.
While oil prices fell on Monday due to the tight labor market in the U.S., which market participants believe could lead to another Federal Reserve rate hike that may affect oil demand, the expectations for a rate hike boosted the U.S. dollar index on Monday and Tuesday, negatively impacting oil prices.
Furthermore, investors are keenly waiting for the U.S. inflation report, which will be released on Wednesday, to predict the near-term trajectory for interest rates.
Notably, consumer inflation data in China from March revealed the slowest pace since September 2021, indicating persisting demand weakness amid an uneven economic recovery.
