US Stocks Surge Overshadows Crude Oil Glut Warning
The US stock market has reached a new high, causing the dollar exchange rate to fall and making commodities more attractive to overseas buyers. As a result, crude oil maintained a sharp rise, with Brent crude prices just below $83 a barrel and WTI crude prices near $78.
The surge in the stock market and signs that OPEC+ members are complying with production cuts have overshadowed the warning from the International Energy Agency about a bleak demand outlook. Despite the positive momentum, the IEA emphasized that the crude oil market may experience a surplus throughout the year due to weak global demand growth.
OPEC+ members have been working to support oil prices by cutting production. Russia, which committed to a voluntary production reduction last year, is close to achieving its production reduction target for the first time. Iraq and Kazakhstan have also pledged to adhere to their targets after failing to fully meet their production cut pledges last month.
In the Middle East, tensions have escalated between Hezbollah and Israel, raising concerns about a wider war. On top of this, disruptions in the Red Sea and refinery shutdowns are expected to impact fuel markets. Diesel and gasoline futures have risen by double digits since the start of the year, while crude oil has gained about 7%.
Despite these warning signs, the risk-bias sentiment in the broader market is contributing to the sharp rise in crude oil prices. The market is now trading near the upper end of a narrow range, with both benchmarks on pace for their fourth gain in the past five weeks. However, the warning signs from the IEA and the geopolitical tensions in the Middle East highlight the potential for volatility and uncertainty in the oil market in the coming months.