WTI rises above $83.00 due to expected summer demand

• WTI price extends gains due to increased expectations for higher US Oil demand during the summer travel season.
• American Automobile Association projects a 5.2% increase in travel, with car travel alone rising by 4.8% this year.
• Oil prices may gain ground as recent US inflation data raised the expectations of the Fed reducing rates in 2024.

West Texas Intermediate (WTI) crude Oil price extends gains for the second consecutive day on Tuesday, trading around the two-month high near $83.10 per barrel. Crude Oil prices appreciate due to heightened expectations for rising fuel demand from the summer travel season.

US Oil demand is expected to increase as the summer travel season peaks with the Independence Day holiday this week. According to the American Automobile Association (AAA), travel during this period is projected to be 5.2% higher than in 2023, with car travel alone rising by 4.8% compared to the previous year, Reuters reports.

Additionally, the recent US inflation data raised the expectations of the Federal Reserve (Fed) reducing interest rates in 2024. Lower interest rates could boost the economic growth of the United States (US), the world’s biggest Oil consumer, hence supporting the WTI price.

On Friday, the US Bureau of Economic Analysis reported that recent US inflation eased to its lowest annual rate in over three years. The US Personal Consumption Expenditures (PCE) Price Index increased by 2.6% year-over-year in May, down from 2.7% in April. Meanwhile, Core PCE inflation rose by 2.6% year-over-year in May, down from 2.8% in April.

In Japan, a fire broke out early Tuesday afternoon at Idemitsu Kosan's Chiba refinery, the country's second-largest Oil refiner. The refinery, located near Tokyo, operates a 190,000 barrels per day crude distillation unit (CDU).