Oil Prices Surge on Higher Demand from US and China, Geopolitical Tensions Persist
Oil prices increased on Friday and were set for a weekly gain due to signs of higher demand from the US and China, as well as ongoing concerns about potential Middle East supply disruptions from the Gaza conflict.
US crude inventories decreased due to increased refinery runs, while China's oil imports in April were higher than the previous year, indicating improving trade activity.
Negotiations to end the fighting between Israel and Hamas have been unsuccessful, keeping tensions high and supporting oil prices.
Brent crude rose 0.6 percent to $84.41 a barrel.
Crude oil prices in the US West Texas Intermediate market rose 0.7 percent to $79.84, marking a 2.2 percent weekly increase.
China's exports and imports both grew in April, indicating a recovery in demand.
The improvement in demand is expected to keep commodity markets strong, according to ANZ Research.
Meanwhile, Israeli forces bombed Rafah in the Gaza Strip, and indirect negotiations with Hamas have ended.
The ongoing conflict increases the possibility of other Middle Eastern countries, including Iran, becoming involved.
Citi analysts warn of geopolitical risks in Rafah, Israel, continuing into Q2 2024.
However, they predict a decrease in oil prices, with an average of $86 a barrel for Brent in Q2 and $74 in Q3.
This is due to looser supply and demand fundamentals, as global oil demand growth is reportedly slowing down.