Oil prices soar due to supply shortages and geopolitical tensions
Oil prices rose in Asian trade on Friday and rebounded from previous declines amid tight supplies and geopolitical tensions, though weak demand in the US has cast a shadow over the market this week.
Brent crude futures rose $1.51, or 1.5%, to $105.37 per barrel as of 0310 GMT, while West Texas Intermediate (WTI) crude futures rose $1.34, or 1.4%, to $97.69 per barrel.
On the economic front, things are still negative, there are still structural shortcomings to increase production volume and this means that physical buyers intend to support the declines knowing the uncertainty about what is happening on the geopolitical front.
Investors are focused on the US Federal Reserve's interest rates next week. Fed officials will likely raise the central bank's interest rates by 75 basis points at its July 26-27 meeting.
The guidance of the rate hikes is important, and any softening in the outlook for rate hikes will be beneficial for global growth.
Signs of declining US demand weighed on oil prices, and global supply shortages continued to keep the market buoyant.
Despite the sharp drop in oil prices, the outlook for supply is bleak. However, until data on declining demand are conclusive, oil prices will remain strong due to the escalating supply shortage with the Russia-Ukraine war.
WTI has rebounded in the last two sessions after data showed US gasoline demand fell nearly 8% from a year ago amid the peak summer driving season hit by record prices at the pump.
In contrast, strong demand signs in Asia supported Brent, putting its first weekly gain in six weeks on track.
Demand for gasoline and distillate fuels in India rose to record levels in June despite higher prices, with total refined product consumption rising 18% from a year ago and Indian refineries operating near their busiest levels ever, analysts said.
This marks much more than a strong recovery after years of being damaged by COVID.
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