Oil prices witnessed a noticeable increase on Tuesday, May 7, 2024, as the price of Brent crude, the global benchmark, rose by 0.71% to reach $82.96 per barrel, while the price of West Texas Intermediate (WTI) American crude rose by 0.84% to reach $78.11 per barrel.
This increase in prices is attributed to several key factors, including:
- Geopolitical tensions: The war in Ukraine continues to cast a shadow over oil markets, as there are fears of further supply disruptions. Rising tensions between the United States and China are also contributing to increased concerns about global stability.
- Demand recovery: Global demand for oil is rebounding strongly as COVID-19 restrictions are eased. Recent data indicates that demand is rising in both the United States and China, the world’s two largest oil consumers.
- Low oil inventories: Data from the US Energy Information Administration (EIA) shows that US crude oil inventories fell last week, indicating a contraction in supply.
- A weak US dollar: The decline in the value of the US dollar against major currencies has made oil cheaper for buyers holding other currencies, boosting demand.
However, there are some concerns that could affect oil prices in the near future, such as:
- Potential for recession: Some analysts warn that the possibility of a global economic recession could lead to a decline in oil demand.
- Increased production by OPEC+: The Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) may decide to increase production at their upcoming meeting, which could lead to increased supply and lower prices.
In general, oil prices remain highly volatile with many factors influencing them. Prices are likely to remain high in the short to medium term due to geopolitical tensions and demand recovery, but they may face some downward pressure in the future if a recession occurs or OPEC+ increases production.
source: lualuatv
