On Tuesday, oil prices increased, reflecting expectations for greater global demand, US economic resilience, and China’s economic rebound.
Despite this, experts warn the uplift could quickly fade, potentially undoing recent gains.
In trading, West Texas Intermediate (WTI) for May ascended by 0.69% to close at $82.73 per barrel.
Similarly, Brent crude for the same month went up by 0.56%, ending at $87.38 per barrel.
This surge pushed WTI and Brent to their peak intraday prices since November 2023, hitting $83.12 and $87.70.
UBS attributes this trend to a tightening energy market, notwithstanding a stronger dollar that typically raises costs for non-dollar currencies. Positive demand indicators have also emerged.
The supply outlook has tightened due to various factors: OPEC+ has cut production, Ukraine has targeted Russian refineries, and economic growth signals have appeared in the US and China.
TD Securities notes algorithms may weaken crude oil support with decreased demand, raising price vulnerability to disappointments.
Julius Baer predicts limited rally potential, observing a shift from “scarcity” to “abundance” in the energy market.
The bank cautions that optimism about rising demand and prices might be misguided, driven more by sentiment than fundamentals.
It forecasts a potential drop to around $70 per barrel by 2024, suggesting a reevaluation of market expectations.