Crude prices saw a significant uptick, climbing about 1% to hit a five-month peak on Monday. This surge was fueled by optimistic economic reports from both the United States and China. Brent futures rose by 73 cents to $87.73 a barrel, while U.S. West Texas Intermediate (WTI) crude increased by $1.04 to $84.21.
Investors’ confidence in rising oil demand was bolstered by positive economic indicators from major economies. In the U.S., the moderation of the personal consumption expenditures (PCE) price index in February, coupled with strong manufacturing activity in China, signaled potential growth in oil demand.
However, this surge in crude futures impacted refining profit margins in the U.S., with the U.S. diesel crack spread hitting its lowest since May 2023 for the second consecutive day.
India’s March Russian oil imports surged over 7% from February, reflecting sustained demand despite geopolitical tensions. Analysts anticipate that the ongoing disruptions in Russian refineries due to drone attacks from Ukraine could further tighten global oil supplies.
China’s pledge to increase imports of high-quality products and services from France amid trade tensions with the European Union also added to the positive sentiment in oil markets.
Optimism in Japan’s services sector, driven by robust tourism and increasing profits, contributed to the overall positive outlook. Additionally, in Europe, oil demand exceeded expectations, further supporting the upward trend in oil prices.
Saudi Arabia, the top oil exporter, is considering raising the official selling price (OSP) for its flagship Arab Light crude in May following strengthened Middle East benchmarks last month.
In Russia, Deputy Prime Minister Alexander Novak announced a focus on reducing oil output in the second quarter to balance production cuts within the OPEC+ alliance, amid ongoing geopolitical disruptions affecting the country’s fuel exports.
Overall, market analysts foresee continued upward pressure on oil prices as economic recovery and geopolitical tensions shape global oil demand and supply dynamics.