Oil prices retreated from earlier seven-week highs as geopolitical developments regained prominence later in the day, compounded by the American Petroleum Institute’s (API) report revealing an unexpected increase in US crude stockpiles.
Trading activity was subdued on Wednesday due to the Juneteenth federal holiday in the US, delaying the official US stockpile report from the Energy Information Administration (EIA) until the next day. By 3:35 p.m. ET on Wednesday, Brent crude was down 0.30% to $85.07, while West Texas Intermediate (WTI) dipped 0.10% to $81.47.
According to Tamas Varga from oil broker PVM, while the current market conditions are lackluster, there are indications of a more optimistic outlook, with recent price movements reflecting genuine confidence in a future tightening of the global oil balance.
Standard Chartered, in a report released on Tuesday, raised its estimate of April oil demand to 101.77 million barrels per day, exceeding its previous forecast by 470,000 barrels per day. The bank maintained its bullish stance, predicting that global oil demand would set new records in May and June, bolstered by improving market sentiment.
The bank’s analysts noted a significant departure from earlier bearish narratives, highlighting a strong recovery in demand since March. They anticipate prices could potentially rise rapidly towards $90 per barrel, driven by speculative short-covering, consumer hedging activities, and strengthened US oil data.
However, Standard Chartered’s machine-learning oil price model, SCORPIO, adopted a more cautious stance, forecasting a Brent settlement of $84.00 per barrel on June 24. Technical indicators, such as Brent’s 50-day, 100-day, and 200-day moving averages near $84 per barrel, are identified as potential factors limiting immediate price gains.
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Geopolitical Tensions Propel Crude Oil Prices Higher
