Oil Prices Rise on Summer Fuel Demand Optimism
Oil prices have increased following expectations of higher fuel demand over the summer, despite the impact of a stronger U.S. dollar making dollar-denominated commodities more expensive for foreign currency holders. This rise comes after a period of declining prices, partly influenced by algorithmic trading. Brent crude oil is trading around $80 per barrel, and West Texas Intermediate is approximately $76.50.
The recent rise in prices is also supported by strong U.S. jobs data, which has led investors to lower their expectations for imminent interest rate cuts. This data has bolstered the dollar, while the euro has faced pressure due to uncertainty in the eurozone, particularly following French President Emmanuel Macron's call for snap legislative elections in June.
OPEC+'s decision to potentially unwind production cuts starting in October has raised concerns about increased global supply. Despite these concerns, analysts from energy consultancies like FGE and Goldman Sachs predict that summer holiday demand will help reduce stockpiles and support oil prices. The market is also closely watching the upcoming Federal Reserve and Bank of Japan meetings, which could further influence global financial and commodity markets.
