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01/07/24
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Crude Prices 2% Higher on Supply Worries, Summer Demand Hopes
On Monday, crude prices rose about 2% on worries that OPEC+ production cuts may lead to supply deficits later this year and hopes of demand rising during the peak summer driving season in the Northern Hemisphere.
On the first day as the front-month contract, Brent futures for delivery in September were $1.25, or 1.5% higher on Monday, from where it closed at $86.25 per barrel on Friday.
U.S. West Texas Intermediate crude for delivery in August was $1.27, or 1.6% higher, at $82.81 per barrel. This put the contract on target for the highest close since Apr. 26.
In June, both contracts rose about 6% and Brent on Friday closed at an 8-week high when the front-month contract was still the August contract.
The monthly gains happened after OPEC+ extended most of its deep oil output cuts far into 2025.
This resulted in analysts forecasting supply deficits in Q3 as demand for air-conditioning and transportation during the summer eats up fuel stockpiles.
In a note to customers, analysts at JP Morgan said demand indicators were solid, especially in the U.S., while peak refinery demand for crude was in place and should last until August.
In the U.S., prices were supported by production and demand in April rising to 4-month highs.
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