Oil prices rose on average by 1% during the week ending Dec. 15 amid strong demand indicators from the US, the world’s biggest oil consumer, and a positive economic growth outlook supported by the interest rate policies of major global central banks.
International benchmark Brent crude traded at $76.86 per barrel at 2.30 p.m. local time (1130 GMT) on Friday, rising by about 1.34% relative to the closing price of $75.84 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, traded at $71.90 a barrel at the same time on Friday, for an increase of around 0.94% from last Friday’s session that closed at $71.23 per barrel.
Oil prices started the week with increases due to the US plan to replenish its Strategic Petroleum Reserves (SPR). The US Department of Energy revealed its plan last Friday to buy up to 3 million barrels of crude oil for the country’s SPR for delivery in March 2024.
Prices continued to rise over strong US demand expectations after a fall in crude oil stockpiles.
The Energy Information Administration (EIA) reported that US commercial crude oil inventories decreased by 4.3 million barrels compared to expectations of a fall of around 1.5 million barrels.
The weakening of the US dollar against other currencies aided the rise in oil prices. The US dollar index, which measures the US dollar’s value against other currencies, fell 2.20% to $101.687 compared to last Friday’s closing.
The positive interest rate decisions of several global central banks this week supported higher oil prices.
The US Federal Reserve (Fed) decided to forego an interest rate hike for the fourth time this year and maintain the federal funds rate at between the 5.25% and 5.5% target range—the highest in 22 years. It also indicated a decrease in interest rates next year.
The rate decision raised hopes of heightened economic activity and bigger oil demand in the country, supporting higher prices.
The European Central Bank and the Bank of England also announced on Thursday that they would leave interest rates unchanged.
Additionally, the EIA said in its latest monthly Short-Term Energy Outlook that it expects upward crude oil price pressures in the coming months with a forecast decline in global oil inventories in the first quarter of 2024.
World oil consumption is anticipated to increase from an average of 99.15 million barrels per day (bpd) in 2022 to 102.34 million bpd in 2024.
