Oil prices rose on Thursday, supported by expectations of strong US demand and a weaker US dollar. Brent crude futures rose 34 cents, or 0.5%, to $71.12 a barrel, their highest level since March 3. US West Texas Intermediate (WTI) crude also rose 0.6% to $67.58.
US government data showed a larger-than-expected drawdown in distillate inventories, including diesel and heating oil. Stockpiles fell by 2.8 million barrels, exceeding expectations for a 300,000-barrel draw, according to a Reuters poll.
In this context, analysts at JPMorgan stated that the outlook for oil demand in the US remains strong, despite the decline in air travel. They believed that this decline does not reflect an overall weakness in demand. Analysts added that global oil demand reached 101.8 million barrels per day, reflecting a year-on-year increase of 1.5 million barrels.
On the other hand, US crude inventories rose by 1.7 million barrels, exceeding expectations for a 512,000-barrel increase.
In addition, the weaker dollar contributed to the rise in oil prices. The dollar has been declining steadily since the end of February. According to Priyanka Sachdeva, senior market analyst at Philip Nova, “The weaker dollar has supported dollar-denominated oil prices.” Sachdeva also stated that oil market investors are optimistic about the possibility of the US Federal Reserve cutting interest rates by 50 basis points by the end of the year.
Some analysts expect oil prices to rise unevenly in the near future. “We expect volatility in the oil markets at the moment,” said Kelvin Wong, senior analyst at OANDA. He explained that the factors driving prices include economic stimulus in China.
Oil prices rise as talks to refill the Strategic Petroleum Reserve gain momentum
Oil prices rose slightly yesterday, with Brent crude (ICE) settling 0.31% higher on the day. These gains were attributed to a rebound in stock markets, as well as a relatively positive report from the Energy Information Administration (EIA). US government data showed that crude oil inventories rose by 1.75 million barrels last week. However, this increase was significantly smaller than the 4.59 million barrel increase reported by the American Petroleum Institute (API) the previous day.
At the same time, crude oil inventories at Cushing fell by 1 million barrels. Refined product inventories fell by 527,000 barrels, while gasoline and distillate inventories fell by 2.81 million barrels. Despite the expected decline in gasoline demand, inventories have continued to decline for three consecutive weeks. It is worth noting that gasoline inventories reached their lowest level since early January.
Overall, this data supports the market positively, contributing to a stronger outlook for oil prices. Another factor supporting this trend is the US Energy Secretary’s statement that current oil prices may provide a good opportunity to replenish the Strategic Petroleum Reserve.
This reserve stands at approximately 396 million barrels, an improvement from the low of 347 million barrels in 2023. However, it remains significantly lower than the 621 million barrels seen in mid-2021.
Energy Secretary Chris Wright has stated that fully replenishing this reserve could take years and require $20 billion in funding. If the 700 million barrel capacity is replenished, the cost would be around $65 per barrel. The US imported approximately 850,000 tons of copper in 2024, representing approximately 50% of its domestic consumption.
Copper prices continue to rise amid tariff threats.
On the other hand, natural gas prices in Europe rose, with the price of the Title Transfer Facility (TTF) rising by 6.4%.
This rise is due to fading hopes for a partial resumption of Russian gas flows to Europe. Although Russia has not agreed to an unconditional ceasefire with Ukraine, it has agreed to halt attacks on Ukrainian energy infrastructure for 30 days.
Investment funds, which had been selling TTF heavily in recent weeks, reversed course last week, buying 1 terawatt-hour (TWh), resulting in a net long position of 127.6 TWh.
Copper is approaching $10,000 per tonne on the London Metal Exchange (LME), a level last reached in October.
Copper prices have risen by about 14% since the beginning of the year.
This increase is partly due to US President Donald Trump’s threats to impose tariffs on imported copper. Copper stocks on the Chicago Board of Trade have also seen a significant increase since Trump’s election victory in November.
At the same time, inventories on the London Metal Exchange (LME) have seen a slight decline. Copper bond cancellations have also risen sharply since late February, indicating increased demand for copper.
Copper markets in Asia saw the largest decline in inventories, followed by Europe.
It’s worth noting that copper demand from LME warehouses in Asia rose to its highest level since August 2017.
Copper prices are expected to remain supported in the near term, especially given advance buying ahead of the tariffs.
The United States is increasing its copper imports due to its heavy reliance on the metal for domestic consumption.
Economic Factors Contributing to Commodity Market Movements
Concerns are growing that the imposition of tariffs could lead to a shortage of copper supplies in the US domestic market.
The United States may be unable to fill the gap in domestic production to keep pace with growing demand.
Under this situation, copper prices are likely to remain high due to tight physical markets and increased imports.
Oil, gas, and metal prices are clearly influenced by a number of economic factors, including global demand, geopolitical tensions, and political decisions at the level of major powers.
These factors work together to shape the trends that determine the path of these markets in the near and medium term.
For example, oil demand forecasts contribute to determining future price trends.
If demand continues to increase, prices are expected to rise further.
At the same time, geopolitical turmoil, such as the conflict between Russia and Ukraine, can significantly impact markets, leading to sharp price volatility.
For metals like copper, global trends in trade and tariffs can significantly impact domestic supplies and, consequently, prices. Fears of supply cuts due to tariffs are driving copper prices higher.
These movements appear likely to continue to impact markets in the coming months, especially given the ongoing tensions between the United States and other countries.
Based on the above, we find that movements in oil, gas, and metals markets depend largely on a combination of local and international factors.
With continued economic and political volatility, these markets are likely to remain under continued pressure, making future forecasts more complex.
