WTI gains ground above $79.20 amid rising demand optimism in China
- WTI prices gain momentum to one-week highs near $79.30 on Friday.
- Rising demand optimism in China and the ongoing Middle East geopolitical tensions lift WTI prices.
- The Fed’s hawkish stance might limit the upside of USD-denominated oil.
Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $79.30 on Friday. The black gold edges higher amid optimism about rising demand in China and the US, the world's two biggest crude-consuming nations.
China’s crude oil imports rose by 5.45% in April compared to the same month last year, indicating an encouraging improvement in demand, China's official statistics showed on Thursday. The improved China Trade Balance data added to the upside momentum for WTI prices, said Tina Teng, an independent market analyst.
On Wednesday, a decline in oil inventories lifted the black gold. Crude inventories in the US dropped by 1.4 million barrels in the week ending May 3, from 7.3 million barrels built in the previous week, according to the Energy Information Administration (EIA). The market consensus projected that stocks would decrease by 1.4 million barrels.
Israeli forces massed tanks and opened fire close to built-up areas of Rafah on Thursday after President Joe Biden said the US would withhold weapons from Israel if its forces mounted a major invasion of the southern Gaza city. The ongoing geopolitical tensions and uncertainties in the Middle East are likely to raise concern about oil supply disruptions, boosting WTI prices.
Nonetheless, the stronger US Dollar (USD), supported by the hawkish stance of the US Federal Reserve (Fed), might cap the upside of the USD-denominated oil for the time being. San Francisco Fed President Mary Daly said on Thursday that uncertainty over the inflation outlook makes policy projections difficult until the Fed gets more clarity.