Oil prices rose today, supported by hopes of increased demand for fuel in the summer, but the strength of the dollar against the backdrop of declining expectations regarding the possibility of cutting interest rates soon limited the gains.
Brent crude futures increased 13 cents, or 0.14%, to $79.73 per barrel, at the time of writing the report, and US West Texas Intermediate crude futures increased 0.1% to $75.60.
Data on Friday showed that the number of new jobs in the United States increased more than expected last month, prompting investors to reduce expectations of a rate cut and sending the dollar higher.
The rise of the dollar increases the cost of purchasing commodities priced in the US currency, such as oil, for holders of other currencies.
The euro was also under pressure, reflecting the uncertainty in the euro zone, after French President Emmanuel Macron called for early legislative elections later in June after his party lost in the European Parliament elections to Marine Le Pen’s far-right party.
Effect of interest
Tony Sycamore, an analyst at IG, said that the markets are also now focusing on the meetings of the Federal Reserve (the US central bank) and the Bank of Japan this week, which are expected to produce results that support monetary tightening.
Brent crude and West Texas Intermediate crude recorded a third weekly loss in a row last week, due to fears that a plan to reduce production cuts implemented by the OPEC Plus group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and other allies, starting in October, will lead to… Increased global supply.
In the Middle East, Iraqi Oil Minister Hayan Abdul Ghani said that there is progress in talks with officials of the Iraqi Kurdistan region and representatives of international companies operating to reach an agreement to resume oil exports through the Iraqi-Turkish oil pipeline, through which about 0.5% of global oil supplies passed.
Expected deficit
In this context, Goldman Sachs expects that healthy growth in consumer spending and strong demand in the summer will push the oil market to record a global deficit of 1.3 million barrels of oil per day in the third quarter, suggesting that the price of Brent crude will rise to the level of $86 per barrel.
The bank reduced its forecast for oil demand growth in 2024 by 200,000 barrels per day to 1.25 million barrels per day, but maintained its expectation that demand growth will be strong, mainly due to the recovery in demand for jet fuel.
The bank said in a note that the modest reduction in demand growth led by China for 2024 is equivalent to the impact of a 100,000 barrels per day reduction in supplies from outside the Organization of the Petroleum Exporting Countries (OPEC) and assuming an increase in strategic purchases of the US oil reserve.
Goldman Sachs expects the average price of Brent to reach $84 and the average price of West Texas Intermediate crude to reach $79 per barrel in 2024, and kept its expectations that the price of Brent will range between $75 and $90. It also kept its average forecast for 2025 unchanged at $82. per barrel.
