- Oil prices rose as OPEC maintains a strong demand growth forecast for 2024 and 2025.
- Decrease in US fuel stocks: more than 7 million barrels of gasoline
- Disruptions to global shipping and avoidance of the Suez Canal drive up crude oil prices and reshape supply routes to Europe.
Oil markets saw a significant rise on Wednesday, with Brent futures rising to $82.93 a barrel and West Texas Intermediate (WTI) crude reaching $77.98. This increase reversed earlier losses and gained support from OPEC's confirmation of a strong demand outlook, with predictions of a demand increase of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025. Higher demand for spot delivery compared to future supplies further highlighted signs of strengthening demand. Analysts at ING noted this trend and noted a notable increase in the April-May futures spread, suggesting a tightening of market conditions.
US fuel stocks fall: 7 million barrels of gasoline and 4 million distillates
In the United States, fuel reserves saw a significant reduction, largely due to the closure of BP Plc's Whiting refinery. Gasoline inventories fell by more than 7 million barrels and distillate stocks fell by 4 million barrels, exceeding analysts' expectations. Meanwhile, U.S. crude oil inventories rose unexpectedly, indicating a complex mix of supply dynamics amid refinery disruptions and logistical issues.
Navigating supply chains: Europe adapts to the Suez bypass
The oil market is also influenced by geopolitical and logistical challenges, especially around the Red Sea and the Suez Canal, leading to a realignment of global shipping routes. Faced with disruptions causing market tightness and rising diesel prices, Europe is adjusting its dependence on supplies from the Middle East and Asia. The continent is increasingly turning to American and West African crude, opting for the longer journey through the Cape of Good Hope rather than the traditional Suez Canal route. This strategic shift not only increases shipping costs but also intensifies the pullback in Brent crude futures.
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