WTI holds its position above $77.50 due to optimistic demand forecasts

• WTI Oil price retraces its recent losses due to optimistic forecasts regarding crude demand for the remainder of 2024.
• Russia surpassed its Oil production quota, which was agreed upon by the OPEC+ in May.
• The higher US Dollar makes crude Oil expensive for buyers with other currencies and dampens its demand.

West Texas Intermediate (WTI) Oil price inches higher to near $77.80 per barrel during the Asian session on Friday. This rise in crude Oil prices is largely attributed to optimistic forecasts regarding crude demand for the remainder of the year.

Reuters reported earlier in the week, the EIA increased its 2024 world Oil demand growth forecast to 1.10 million barrels per day (bpd) from the previous estimate of 900,000 bpd. Additionally, the Organization of the Petroleum Exporting Countries (OPEC) maintained its 2024 forecast for robust growth in global Oil demand, citing expectations for increased travel and tourism in the second half of the year.

Russia's energy ministry announced on Thursday that its Oil production in May surpassed the quotas agreed upon by the OPEC+ alliance. The ministry acknowledged this overproduction in a statement and stated that corrective measures would be implemented in June to achieve the targeted production levels, as per Reuters.

The Federal Open Market Committee (FOMC) kept its benchmark lending rate within the range of 5.25%–5.50% for the seventh consecutive time during its June meeting on Wednesday, as widely anticipated. Higher interest rates could hinder economic growth, which in turn negatively impacts Oil demand.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, edges higher to near 105.30 with 2-year and 10-year yields on US Treasury bonds standing at 4.71% and 4.26%, respectively, at the time of writing. The higher US Dollar makes Oil expensive for buyers with other currencies, dampening the Oil demand.