1 of 2 | Crude oil prices were in rally mode on anticipation of a breakthrough in U.S. debt ceiling negotiations and healthy demand, though demand for energy products is below pre-pandemic levels. File photo by John Angelillo/UPI | License Photo
May 17 (UPI) -- Commodity markets on Wednesday moved higher after a federal U.S. report showed an uptick in energy demand, though the amount of refined petroleum products sent to the market is below pre-pandemic levels.
The U.S. Energy Information Administration, the statistical arm of the Energy Department, reported that the total amount of refined petroleum products sent to the market, a proxy for implied demand, was up 2% from year-ago levels to reach 19.9 million barrels per day.
For just gasoline, the amount sent out to the market was up 2.9% from this time last year to average 9.1 million bpd over the four-week period ending May 12. For the comparable week in 2019, however, total product supplied averaged 20.1 million bpd and 9.4 million bpd for gasoline.Total commercial inventories of crude oil increased from week-ago levels, though data for motor gasoline showed storage levels declined and are about 6% below the five-year average for this time of year.
Gasoline production also declined.
Implied demand figures, along with an assertion from President Joe Biden that the United States will not default on its debt obligations, led to a rally in global commodities.
The price for Brent crude oil, the global benchmark for the price of oil, was up some 2.6% as of 12:30 p.m. EDT to trade at $76.84 per barrel. It closed the first trading day of May, however, at $79.31 per barrel.
Optimism over the potential for a breakthrough in negotiations over the debt ceiling overshadowed data that would otherwise be bearish for commodities. Inflation for the economies that use the euro currency increased month-on-month to April and more would-be homebuyers are staying on the sidelines as interest rates increase in the U.S. economy.
Giovanni Staunovo, Wayne Gordon and Dominic Schnider, all analysts at Swiss investment bank UBS, said in an emailed market report that they lowered their forecast for Brent by $10 per barrel "as more supply than expected and recession fears keep investors on the sidelines."
Their forecast for $95 per barrel for Brent is far more bullish than the EIA's estimate of $79 per barrel for 2023. Brent averaged $101 during 2022.
Lingering inflationary pressures and concerns about the health of the U.S. banking sector are rattling investors nerves, while expectations that China would post a dramatic rebound after lifting COVID-19 restrictions have yet to bear fruit.