Business a.m.
Crude oil traded higher on Wednesday, as traders sought to capitalise on the flickering embers of hope for a Middle East ceasefire,while the fundamentals of the market remained solid, as the oil bulls continued to charge ahead.
The front-month Jun24 ICE Brent futures contract traded at $90.07 per barrel, up from the previous day’s close of $89.42 per barrell. In tandem, the May24 NYMEX WTI contract had risen to $85.88 per barrel, from $85.23 per barrel the previous day.
After two days of losses, oil markets regained ground as hopes for a Gaza ceasefire faltered, with Israel considering a ground operation against the city of Rafah. Though markets had been buoyed by initial signs of progress in the negotiations, the situation now looked uncertain, with Iran-Israel tensions further complicating matters.
The rhetoric between Israel and Iran became increasingly belligerent, with Israeli Foreign Minister Israel Katz warning that if Iran were to attack Israel, it would respond with force inside Iranian territory. His comments followed a statement by Iranian Supreme Leader Ayatollah Ali Khamenei, who threatened to punish Israel for a strike on an Iranian consular building in Syria last week.
Oil traders remained bullish on the market, focusing on the tight supply and demand fundamentals, as well as the prospects of continued production cuts by OPEC+.
According to Carsten Fritsch of Commerzbank, the forward curve of Brent crude oil prices has been falling, which is indicative of tight market fundamentals. This has been reflected in the widening of the Jun24/Jul24 Brent spread, which has reached $0.90 per barrel.
According to the US Energy Information Administration (EIA) in its Short Term Energy Outlook report, global oil consumption is set to increase to a record high of 102.9 million barrels per day in 2024, driven by rising demand in key markets such as China and India.
The latest forecast by the EIA showed that global liquid fuel consumption in 2024 was expected to be 400,000 barrels per day (bpd) higher than previously estimated, reaching 102.9 million bpd. In addition, the 2025 estimate was revised upwards by 500,000 bpd to 104.3 million bpd.
