As demand was predicted to increase for oil in the second half of the year and supplies from Canada and OPEC+ (the Organization of the Petroleum Exporting Countries and its allies) to have decreased recently, oil prices grew by 1% on Monday.
The US West Texas Intermediate (WTI) futures increased by 44 cents or 0.6 percent to $71.99 per barrel, while Brent futures increased by 41 cents or 0.5 percent to $75.99 a barrel.
While this is happening, the International Energy Agency (IEA) issued a warning about an impending oil shortfall in the second half of the year when demand is anticipated to outpace supply by over 2 million barrels per day.
The Paris-based organization increased its estimate for the world’s oil consumption by 200,000 barrels per day to 102 million barrels per day, adding that China’s recovery following the easing of COVID-19 limitations had outperformed forecasts, with demand reaching a record 16 million barrels per day in March.
Along with India and the Middle East, the top oil importer in the world is expected to provide close to 60% of the growth in global demand in 2023, counterbalancing weak demand in developed nations.
According to the IEA, the producer group’s volumes will decline by 850,000 barrels per day from April through December as a result of the OPEC+ cuts, which will result in a minor increase in oil supply of 1.2 million barrels per day for the year.
According to the IEA, Russian oil exports increased in April to 8.3 million barrels per day, the highest level since its invasion of Ukraine, and trade revenues increased by $1.7 billion for the month to $15 billion.
After massive amounts of petroleum supply in Alberta, Canada, were cut off by wildfires last week, both oil benchmarks rose by nearly 2%, marking the first weekly increase in five.
Following its implementation this month, OPEC+’s voluntary production curbs are also starting to have an effect.
While export flows to Turkey’s Ceyhan port show no prospect of restarting after a suspension that has lasted over two months, oil production in the Kurdistan region of Iraq continued to decline.
At their annual leaders’ meeting on Saturday, the Group of Seven (G7) countries promised to step up their efforts to stop Russia from evading the price limitations on its oil and fuel exports.
The world’s largest oil importer responded by referring to a “anti-China workshop” after the G7 singled out China on concerns like Taiwan, nuclear weapons, economic pressure, and human rights violations.
Prior to the US potentially experiencing an unprecedented default on June 1, US President Joe Biden and senior congressional Republican Speaker Kevin McCarthy will meet on Monday to discuss lifting the federal government’s debt ceiling.
However, a stronger Dollar kept oil prices in check as the market awaited information on the US debt ceiling negotiations.
Investors awaited additional cues on whether the US Federal Reserve is likely to keep raising interest rates and kept an eye out for information on the US debt ceiling as the US Dollar increased versus a basket of other currencies, keeping just below a two-month high.
An increase in the price of oil for holders of foreign currencies might be a drag on demand for oil.
