Oil prices increased on Friday, with the week’s gain anticipated to be over 6%, as a result of strong indications of rising demand in the world’s largest oil consumer, China, and anticipations of more gradual interest rate increases in the United States.
Brent crude futures rose 5 cents to $84.08 per barrel, up from $83.50 at the start of the session. WTI crude futures rose 13 cents to $78.52 per barrel after falling to $77.97 earlier in the session.
Brent is up 6.7% this week, while WTI is up 6.2%, recouping most of last week’s losses.
Following the reopening of its borders, Chinese crude purchases and increased road traffic fueled optimism about the world’s second-largest economy’s demand recovery.
ANZ analysts noted a 31% increase in the congestion index covering the 15 Chinese cities with the highest vehicle registrations from the previous week, which is another encouraging development.
US inflation dropped for the first time in 2 and a half years. Hence, the dollar’s value dropped to a nearly nine-month low. This supported expectations that the Federal Reserve would slow the rate hikes, supporting the price of oil.
Because buyers holding other currencies can purchase the commodity at lower prices, a weaker dollar tends to increase oil demand. According to Vandana Hari, founder of oil market analysis provider Vanda (NASDAQ: VNDA) Insights, some of the week’s gains will likely fade in Asian trade.
For Europe, Energy Efficiency Is Now Essential
Russia’s invasion of Ukraine caused a global shortage of oil and gas due to sanctions imposed on Russian energy. Hence, governments have rushed to find alternative sources. At the same time, they encouraged the public to reduce their energy consumption to improve energy security drastically.
The IEA emphasized the need to reduce energy consumption in Europe, where average dwellings use roughly twice as much energy for heating per square meter as in other countries with similar climates. The ongoing Russia-Ukraine conflict demonstrated the urgent need for Europe to reduce its reliance on Russia and fossil fuels.
After nearly a year of calls for greater energy efficiency and increased government efforts to lessen reliance on Russia’s oil supplies, the world needs to do more to achieve greater energy security. According to recent research, governments can implement policies to develop new infrastructure more sustainably. Moreover, it can have incentives and schemes to hasten energy efficiency improvement. However, the United Kingdom believes that achieving these objectives will necessitate a war effort.
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