The situation in the US economy has led to higher oil prices
20 March 2025 11:53
Oil prices showed growth on Thursday after a larger-than-expected decline in US fuel stocks and a weaker US dollar. This was reported by "Komersant Ukrainian" with reference to Reuters.
Futures for Brent crude oil rose by 34 cents, or 0.5%, to reach $71.12 per barrel as of 09:45 Kyiv time, the highest level since March 3. U.S. West Texas Intermediate (WTI) rose 42 cents, or 0.6%, to $67.58.
Impact of the situation in the United States
U.S. government data showed a larger-than-expected decline in distillate stocks over the past week, including diesel and fuel oil, which fell by 2.8 million barrels, almost ten times the 300,000 barrel decline predicted by Reuters.
“The outlook for US oil demand remains healthy despite the decline in air travel,”
– said JPMorgan analysts in a research note, adding that the decline in US travel activity does not indicate broader weakness in the demand outlook.
According to the analysts, global oil demand averaged 101.8 million barrels per day, reflecting an annual increase of 1.5 million barrels per day.
However, US crude oil inventories rose by 1.7 million barrels, exceeding expectations for a 512 thousand barrel increase according to a previous Reuters poll.
The weaker dollar also contributed to the rise in oil prices, as the US currency has been on a downward trend since late February.
“During the week, the weakness of the dollar seemed to provide some support to dollar-denominated oil prices,”
– said Priyanka Sachdeva, senior market analyst at Phillip Nova.
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The situation in the Middle East
Global risk premiums rose after Israel launched a new ground operation in Gaza on Wednesday, breaking a nearly two-month-old truce.
The United States continued airstrikes against Houthi targets in Yemen in response to the group’s attacks on ships in the Red Sea. US President Donald Trump also promised to hold Iran accountable for future Houthi attacks.
According to OANDA analyst Wong, the factors that negatively affect the market in the short term are the upcoming increase in production among OPEC members and the likely disappointing March reading of the S&P Global Services Purchasing Managers’ Index (PMI) in the United States.
Outlook
Investors in the oil sector remain hopeful about the prospect of the Federal Reserve easing interest rates by 50 basis points by the end of the year.
However, some analysts expect uneven price increases in the near term.
“I expect an uneven increase in the oil markets in the near future,”
– said Calvin Wong, senior market analyst at OANDA, adding that factors supporting price increases include China’s stimulus measures and the resumption of hostilities between Israel and Hamas.
Global risk premiums rose after Israel launched a new ground operation in Gaza on Wednesday, breaking a nearly two-month truce.
The United States continued airstrikes against Houthi targets in Yemen in response to the group’s attacks on ships in the Red Sea. US President Donald Trump also promised to hold Iran accountable for future Houthi attacks.
According to OANDA analyst Wong, the factors that negatively affect the market in the short term are the upcoming increase in production among OPEC members and the likely disappointing March reading of the S&P Global Services Purchasing Managers’ Index (PMI) in the United States.
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