Oil continued to trade near a five-month high on Thursday as declining U.S. inventories and a rise in Chinese demand show signs of a tightening global market.
West Texas Intermediate futures, the U.S. benchmark, remained above $83 per barrel; gaining 4.4% over the past two days. Oil supply was disrupted by falling Russian exports along with flow disruptions from Iraqi Kurdistan.
U.S. supplies were rocked by a disruption in supply from the key American storage hub in Cushing, Oklahoma, while Chinese oil supplies were on the rise, with the country shipping its most oil in three years during March.
Oil’s rebound this year is being viewed as a significant sign that U.S. inflation is moderating, thereby giving the Federal Reserve the gap it needs to resume its interest rate hikes.
Focus is also being placed on the Organization of Petroleum Exporting Countries, which is set to release its monthly snapshot on Thursday. The organization and its allies announced a surprise output cut earlier this month.
In the very short term, we expect consolidation after the recent OPEC+ cut-induced price rally,” Helge Andre Martinsen, a senior oil analyst at DNB Bank ASA stated. “We estimate the global oil market balance to flip to undersupply as soon as May, and so remain positive on oil prices for the rest of the year.”