Global oil prices surge as analysts predict strong demand

WEB DESK: Global oil prices rose by approximately 2 per cent to reach a one-week high on Monday, driven by optimistic forecasts for increased fuel demand this summer.

This surge occurred despite the headwinds of a stronger U.S. dollar and expectations that the U.S. Federal Reserve (Fed) will maintain higher interest rates for an extended period.

The Fed typically uses higher interest rates to curb inflation, which can lead to increased borrowing costs for consumers and businesses.

This, in turn, can slow economic growth and reduce oil demand. Similarly, a stronger U.S. dollar can diminish oil demand by making dollar-denominated commodities, such as oil, more expensive for holders of other currencies.

By 11:23 am EDT, Brent futures had risen by $1.36, or 1.7 per cent, to $80.98 a barrel. U.S. West Texas Intermediate (WTI) crude saw a rise of $1.46, or 1.9 per cent, to $76.99 a barrel. Both benchmarks are poised for their highest closing levels since May 31.

Goldman Sachs analysts predict that Brent crude will rise to $86 a barrel in the third quarter, driven by strong summer transportation demand, which they believe will push the oil market into a third-quarter deficit of 1.3 million barrels per day (bpd).

The U.S. dollar also climbed to a one-month high against a basket of other currencies, with the euro falling sharply due to political uncertainty in Europe. Gains by the far right in the European Parliament elections have prompted French President Emmanuel Macron to call a snap national election.

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