Brent steady amid signs of improving demand

The front-month ICE Brent contract remained unchanged on the day, to trade at $82.88/bbl at 09.00 GMT.

PHOTO: Oil pump jack and the US dollar. Getty Images

Upward pressure:

Brent futures gained support after the US Energy Information Administration (EIA) reported a decline in US crude stocks. This has eased some demand growth fears in the global oil market.

Commercial crude oil inventories in the US dropped by 2.51 million bbls to 457 million bbls in the week ended 10 May, according to the EIA. The drawdown in crude inventories was “larger-than-expected” according to VANDA Insights’ founder and analyst Vandana Hari.

Brent’s price found further support after the US Consumer Price Index (CPI) figures showed a slower-than-expected growth of 0.3% in April, indicating that inflation in the US is declining.

Besides, concerns about oil supply disruptions in the Middle East have remained elevated this week due to the ongoing Israel-Hamas war. “[Brent] Crude oil saw gains from robust demand and Middle East supply concerns,” Saxo Bank’s analysts said.

Downward pressure:

A sharp rise in Brent futures was capped after the International Energy Agency (IEA) trimmed its global oil demand growth in its latest oil market report.

The Paris-headquartered energy agency expects oil demand to drastically decline from 2.3 million b/d in 2023 to 1.1 million b/d this year, 140,000 b/d lower than its last month’s projection.

“The [oil] market’s mood was tempered after the International Energy Agency cut its growth forecast for oil demand,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

By Aparupa Mazumder

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