Oil Rebounds As Demand Data Finally Makes Impact In Trading Circles

Meanwhile, OPEC's secretary general reiterated strong demand expectations for 2024: File Image/Pixabay

Following weekly losses of 2 and 3 percent for Brent and West Texas Intermediate respectively, oil prices on Monday gained about 1 percent, possibly due to data indicating strong demand that had been previously overlooked by traders.

Also, Vandana Hari, founder of Vanda Insights, said, "Sentiment in the oil complex ... has been skittish as investors are constantly recalibrating expectations for the Federal Reserve's monetary policy trajectory."

Reminiscent of last week's remarks by Fed officials, key European Central Bank policymakers on Monday said they have room to cut interest rates as inflation slows but will take their time doing so, and as a result Brent settled up $1 at $83.12 per barrel.

WTI settled up 93 cents at $78.65 per barrel.

Unsurprisingly, increasing attention is being paid to the U.S. personal consumption expenditures index expected to be released this Friday, as it is the Fed's preferred measure of inflation; similarly, German inflation data on Wednesday and euro zone readings on Friday are keenly anticipated.

Meanwhile, trading in the U.S. on Monday was muted by Memorial Day, but the start of the summer driving season reportedly buoyed sentiment as early signs from the American Automobile Association indicate that the number of people to fly over the weekend will be the highest in nearly 20 years.

Giovanni Staunovo, a commodity strategist at UBS Group, said, "We saw a very strong demand from the US last week ahead of the Memorial Day long weekend; record flight activity and strong gasoline demand should give some support to oil prices."

For its part, the Organization of the Petroleum Exporting Countries (OPEC) remained optimistic about global oil demand: Haitham Al Ghais, the cartel's secretary general, said on Monday that  "For 2024, oil demand growth is at 2.2 million barrels per day [bpd]."

He added that in 2025, the global oil demand growth forecast shows a further robust expansion of 1.8 million bpd day year-over-year, averaging 106.3 million bpd.

OPEC estimated that global oil demand in the first quarter of this year rose by 2.4 million bpd in the first quarter of 2024 and for the full year will reach 104.5 million bpd, driven by "strong air travel demand and healthy road mobility, including trucking, as well as industrial, construction, and agricultural activities in non-OECD countries."