Oil Continues to Gain After US Stockpiles Shrink Most in Two Months
Oil prices climbed for a second day as unusually low US stockpiles continued to challenge the view that the market is headed for a global supply glut later this year.
Brent traded above $67 per barrel, extending its 1.6% gain on Wednesday, even though futures have been stuck in a tight range for more than two weeks during the quiet summer trading season.
The volume of crude oil held in storage tanks across the US fell by 6 million barrels last week, the most since mid-June. Gasoline stocks also fell for the fifth straight week, reminding us that, although many traders expect a surplus later this year, global inventories are still very low. Demand for jet fuel remains very strong.
Oil is still down more than 10% this year due to concerns that US trade policies will impact economic growth as OPEC+ countries restore stalled production, raising expectations of a supply glut after the peak summer demand season ends.
Traders are also monitoring progress toward a ceasefire in Ukraine that could pave the way for fewer restrictions on Russian crude. "The market continues to weigh a mix of bullish and bearish drivers, which, combined with thin summer liquidity, is keeping prices under control," said Ole Hansen, head of commodity strategy at Saxo Bank.
Brent has traded between $65 and $70 per barrel since August 4.
On a bearish note, crude oil inventories at the key US storage hub in Cushing, Oklahoma, rose for a seventh week, according to US Energy Information Administration figures released Wednesday. The delivery point for West Texas Intermediate crude futures has seen a recent surge in supply from the Permian Basin. (alg)
Source: Bloomberg
