Oil rises after fall in US stocks
The sharp drawdown in US crude and petrol stocks reinforces optimism of a quick recovery in fuel demand
Tokyo — Oil prices climbed on Thursday after a sharp drawdown in US crude and petrol stocks reinforced optimism of a quick recovery in fuel demand and on doubts about the future of the 2015 Iran nuclear deal that could end US sanctions on Iranian crude exports.
Brent crude futures rose 9c, or 0.1%, to $75.28 a barrel by 1.03am GMT, after increasing 0.5% on Wednesday.
US West Texas Intermediate (WTI) crude futures gained 6c, or 0.1%, to $73.14 a barrel, after rising 0.3% on Wednesday.
Both benchmarks hit their highest since October 2018 on Wednesday, but they pared gains later in the session as energy traders locked in profit after the US inventory report, Edward Moya, senior market analyst at brokerage Oanda, said in a report. Prices resumed climbing in Asia trade on Thursday.
US crude inventories fell by 7.6-million barrels in the week to June 18 to 459.1-million barrels, their lowest since March 2020, the US Energy Information Administration said. The drawdown was nearly double analysts' expectations in a Reuters poll for a 3.9-million barrel drop.
US petrol stocks fell by 2.9-million barrels in the week, against analysts’ expectations for an 833,000-barrel rise.
“Oil prices were lifted by the US inventory data which confirmed the strong outlook for higher fuel demand in the second half of this year, backed by a recovery in road and air travel,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“Behind the rally is also a view that there are still gaps in the talks over the 2015 Iran nuclear deal,” he said.
Iran said on Wednesday the US had agreed to remove all sanctions on Iran’s oil and shipping but Washington said “nothing is agreed until everything is agreed” in talks to revive the 2015 Iran nuclear deal.
“We may see a short-term correction ahead of the Opec+ meeting, but the market trend will remain bullish due to tightening supply-demand balance,” Kikukawa said.
Oil cartel Opec and its allies (Opec+), which meet on July 1, have been discussing a further unwinding of record output cuts in 2020 from August but no decision has been made, two Opec+ sources said on Tuesday.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.