World demand for gasoline and oil is decreasing?

Last week, oil prices continued to “dance”. After increasing in the first two sessions of the week, oil prices turned down in the middle of the week and increased again in the last session of the week. This fact raises the question, will the demand for gasoline and oil decrease in the future?

Last week, world oil prices continuously "danced". Photo: MXV

Oil prices increased for 2 consecutive sessions

At the end of the first trading session of the week (June 2), the energy market witnessed a strong increase in all 5 commodities in the group. In which, the price of two crude oil commodities simultaneously increased by nearly 3%, despite the fact that the OPEC+ group will continue to increase production in July.

WTI crude oil prices recorded an increase of 2.85%, reaching 62.52 USD/barrel. Meanwhile, Brent crude oil prices also increased from 62.78 USD/barrel to 64.63 USD/barrel, equivalent to 2.95%.

On the third day, geopolitical tensions pushed oil prices to continue to rise. According to the Vietnam Commodity Exchange (MXV), at the end of the trading session on June 3, the energy group continued to see green color maintained on all 5 commodities.

Of which, Brent oil price increased by 1.55% to 65.63 USD/barrel, while WTI oil price increased by 1.42% to 63.41 USD/barrel - both reached the highest level in the past three weeks.

On May 31, the Organization of the Petroleum Exporting Countries and its partners (OPEC+) officially decided to increase production in July by 411,000 barrels per day. This is the third consecutive month that OPEC+ has increased oil production.

Initial projections of this production increase have raised concerns about a global supply glut, with the situation of some member countries exceeding their quotas still unresolved.

However, according to analysts, many investors had expected an even higher production increase than the current one. Goldman Sachs predicted that August could become the fourth consecutive month of OPEC+ increasing production by 411,000 barrels/day, with the reason given being the cyclical increase in consumption in the coming summer, which is also the peak travel season for Americans.

Meanwhile, the US Dollar Index fell 0.63% on June 2, making crude oil more attractive to investors holding other currencies. The continued geopolitical turmoil, with disagreements between the US and Iran over the nuclear program, as well as Russia-Ukraine tensions, further reinforced the upward momentum in the oil market.

Oil prices rose again in the trading session on June 5 after a mid-week decline. Source: MXV

Question mark for gasoline and oil demand

However, on Wednesday (June 4), the oil price increase in the previous two trading sessions was stopped when the US Energy Information Administration (EIA) announced that commercial crude oil reserves in the US decreased by 4.3 million barrels in the working week ending May 30.

Closing the trading session on June 4, red covered the energy market when all 5 commodities in the group simultaneously turned to decrease in price.

Closing, Brent oil price fell below the threshold of 65 USD/barrel when it stopped at 64.86 USD/barrel, down about 1.17%. Similarly, WTI oil price also decreased about 0.88%, down to 62.85 USD/barrel.

However, on the trading day of June 5, oil prices recovered their upward momentum thanks to new positive information in global trade relations, contributing to strengthening the optimistic sentiment in the market.

Closing, Brent oil price returned to the threshold of 65 USD/barrel, stopping at 65.34 USD/barrel, corresponding to an increase of 0.74%. WTI oil price also recorded an increase of 0.83%, reaching 63.37 USD/barrel.

Tensions in US-China trade relations have been somewhat eased after a phone call between US President Donald Trump and Chinese President Xi Jinping.

In addition, information that the US trade deficit in April fell sharply from more than 138 billion USD (March) to 61.6 billion USD, contributed to strengthening confidence in the economic outlook, causing oil prices to recover.

Mr. Nguyen Duc Dung, Deputy General Director of the Vietnam Commodity Exchange, said that the possibility of oil prices increasing slightly in the short term is mainly due to increased demand for raw materials in countries, including the US, during the peak summer season, along with positive signals about US-China trade negotiations.

“However, there are still some other factors to pay attention to, including OPEC+’s plan to increase production and the OECD’s cut in its global growth forecast, causing observers to predict a drop in oil prices. This raises the question of whether or not there will be a decline in demand for gasoline and oil in the future,” said Mr. Nguyen Duc Dung.

Source: https://hanoimoi.vn/nhu-cau-su-dung-xang-dau-the-gioi-suy-giam-704829.html