JAKARTA - The price of crude oil extended its rise at the end of trading Monday, April 24. This is thanks to the prospect of improving demand for oil with investors increasingly optimistic that holiday travel in China will increase fuel consumption in the world's largest oil importer.
West Texas Intermediate (WTI) crude futures for June delivery rose 0.89 dollars, or 1.14 percent, to settle at 78.76 dollars a barrel on the New York Mercantile Exchange.
Brent crude futures for June delivery rose 1.07 dollars, or 1.31 percent, to close at 82.73 dollars a barrel on the London ICE Futures Exchange.
Last week, both contracts fell more than 5.0 percent for their first weekly drop in five weeks as demand for US gasoline was indicated to fall from the previous year.
"Although market participants see oil demand shrinking, early May will deliver the start of the annual peak consumption season," said a research note by PVM Oil Associates on Monday (24/4/2023).
"Global oil demand will hit a record high this summer, which in turn will serve as a solid basis for price boosts up again. However, until then, economic uncertainty and interest rate anxiety will maintain potential increases," said PVM Oil Associates.
There is a lot of optimism surrounding the Chinese holiday as it relates to the demand for jet fuel, said Robert Yawger, managing director and energy strategist at the Mizuho Americas futures.
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Orders in China for overseas travel during the upcoming May Day holidays show a sustainable recovery on trips to Asian countries, but the number remains far from levels before COVID-19 with long-distance plane ticket prices soaring and not available enough flights.
The tight supply due to additional supply cuts planned by the OPEC+ producer group starting in May can also raise prices.
"The production cuts planned by the OPEC+ alliance and strong demand prospects from China could boost prices in the coming days," said independent oil analyst Sugandha Sachdeva.
Meanwhile, there are several signs of resumption of North Iraqi crude exports through the Turkish Ceyhan oil terminal, according to a report by Reuters on Monday (24/4/2023).
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