Global benchmark Brent crude oil hovered above $84 per barrel on Friday, buoyed by data signaling growing demand in the world’s two largest crude consumers, the United States and China.
The uptick in Brent prices came after data this week showed falling U.S. crude inventories, driven by higher refinery runs. Additionally, figures on Thursday indicated that China’s oil imports in April were higher than the previous year.
China’s exports and imports also returned to growth in April, after contracting the previous month, further bolstering the positive demand signals.
Geopolitical tensions in the Middle East also provided support to oil prices, with a Ukrainian drone attack setting an oil refinery in Russia’s Kaluga region on fire. Ongoing conflicts in the region, particularly the potential for escalation from Iran, a key oil producer, added to the upward pressure on prices.
However, analysts at Citi expect oil prices to ease through 2024, with Brent averaging $86 per barrel in the second quarter and $74 in the third quarter, as global oil demand growth appears to be moderating.
The focus will now shift to U.S. inflation data next week, which could influence the Federal Reserve’s interest rate policy path. Meanwhile, the European Central Bank is increasingly likely to start cutting rates in June.