After temporarily rising to its highest level since November—$86 per barrel—Brent crude briefly declined on Monday. This volatility was a result of the intensifying attacks by Ukraine on Russian energy infrastructure.
At 1333 GMT on May, delivery of Brent crude oil futures increased by 51 cents to $85.85 a barrel. Meanwhile, the April contract for West Texas Intermediate (WTI) crude in the United States increased by 62 cents to $81.66.
“Crude oil remains in a positive trend with Brent crude holding firm above $85 per barrel and WTI crude above $81, with support from better than expected Chinese data on industrial production & fixed asset investments, while possibility of supply issues from the middle-east and higher demand estimates is seen keeping sentiments upbeat,” stated Pranav Mer, VP – Research (Commodity & Currency) BlinkX and JM Financial.
What factors are driving the crude oil prices?
- Notwithstanding refinery outages, market participants have suggested that Russia intends to increase oil exports through its western ports by over 200,000 barrels per day (bpd) in March, reaching a monthly total of 2.15 million bpd.
- Iraq declared on Monday that it would cut its crude shipments by more than 100,000 barrels per day in the future months in comparison to the previous month’s levels. The purpose of this cutback is to counteract any growth beyond its OPEC+ quota that was observed in January and February.
- Due in part to the International Energy Agency’s fourth higher revision of its 2024 demand prediction since November, both oil contracts experienced advances last week, hitting their highest levels since November.
- This week, most of the focus is on how major nations will implement their monetary policies going forward, because many central banks have kept interest rates high for an extended period of time in order to counteract ongoing inflationary pressures. Lower interest rates might spur demand for oil in the US, the world’s biggest oil consumer, and raise oil prices.
