Stimulated by multiple factors, Brent crude oil breaks through $120 again

May 29, 2024, 11:58 AM

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Since May 19, international crude oil prices have surged for eight consecutive trading days, hitting a two-and-a-half-month high. Factors include recovering demand in Asia, EU sanctions on Russian oil, and geopolitical tensions in the Persian Gulf. As summer approaches, gasoline and diesel demand is rising, driving prices higher. Analysts express optimism about market tightening and continued gains.

Since May 19, international crude oil has risen for eight consecutive trading days!

International oil prices climbed to a more than two-and-a-half-month high on Monday (May 30), as the improvement of the epidemic in Asia rekindled the market's confidence in demand recovery, while the supply side faced increasing challenges: EU reached agreement, agreed Russia has been banned from exporting oil to the 27 EU nations; news that Iran seized two Greek tankers in the Persian Gulf over the weekend also raised concerns about the risk of oil shipments in the Strait of Hormuz.

Brent crude futures rose $2.24, or 1.8%, to settle at $121.67 a barrel on the day, the data showed, marking the first time Brent crude has returned above the $120 mark since March 9. U.S. WTI crude futures rose $1.79, or 1.56%, to $116.86 a barrel, extending their strong performance since last week.

As May draws to a close, Brent is on track for its sixth straight month of gains this month, which would be the longest such streak in more than a decade.

The months-long rally in oil prices has been buoyed by the conflict in Russia and Ukraine and by rising demand as more economies recover from coronavirus-related lockdown restrictions. In the U.S., the Memorial Day holiday weekend kicked off the summer driving season, with U.S. retail gasoline prices climbing further to record levels.

"There is clearly a lot of optimism in the crude oil market today," said Daniel Hynes, senior commodity strategist at ANZ. He noted that the market is already tightening ahead of the peak driving season, even if new EU sanctions on Russia have yet to be finalized, which will further boost demand.

Global demand for gasoline, diesel and jet fuel is already rising ahead of peak summer demand in the United States and Europe, and a further EU ban on Russian oil is expected to tighten the crude market.

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