Oil rises 1% amid supplies contraction, higher demand

May 23, 2023

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On Monday, oil prices experienced a 1% increase, supported by a rise in U.S. gasoline futures and optimistic forecasts for oil demand in the second half of the year. Additionally, supplies from Canada and OPEC+ have declined in recent weeks, further contributing to the upward trend. However, the stronger dollar and ongoing U.S. debt ceiling talks limited the gains in oil prices.

Brent futures for July delivery closed at $75.99 per barrel, up 41 cents or 0.5%. U.S. West Texas Intermediate (WTI) crude for June delivery settled at $71.99 per barrel, rising 44 cents or 0.6%. The July contract, now the new front-month contract, increased by 0.5% to settle at $72.05.

The International Energy Agency (IEA) issued a warning about a potential oil shortage in the second half of the year, as demand is projected to surpass supply by nearly 2 million barrels per day (bpd). The growth in oil demand, primarily driven by Asia, could potentially result in supply shortages and upward pressure on prices.