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Oil gains as draw in U.S. crude stocks reinforces outlook for robust demand

Category: Economy

Date: 2021-06-24T06:49:52+0000
Oil gains as draw in U.S. crude stocks reinforces outlook for robust demand

Shafaq News/ Oil prices gained for a second day on Thursday after a bigger-than-expected drawdown in U.S. crude and gasoline stocks confirmed outlook for robust fuel demand and on doubts about the future of the 2015 Iran nuclear deal that could end U.S. sanctions on Iranian crude exports.

Brent crude futures rose 14 cents, or 0.19%, to $75.33 a barrel by 0520 GMT, after increasing 0.5% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures climbed 11 cents, or 0.15%, to $73.19 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 U.S. inventory report, Edward Moya, senior market analyst at brokerage OANDA, said in a report. Prices resumed climbing in Asia trade on Thursday.

U.S. 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 U.S. Energy Information Administration said. The drawdown was nearly double analysts’ expectations in a Reuters poll for a 3.9 million-barrel drop. [EIA/S]

U.S. gasoline stocks fell by 2.9 million barrels in the week, against analysts’ expectations for an 833,000-barrel rise.

“The data was encouraging since not only crude stocks, but also gasoline inventory dropped, suggesting healthy demand and tight supply,” said Tetsu Emori, CEO of Emori Fund Management Inc.

“Unless OPEC+ decides next week to increase output more than expected for August and later, oil prices are expected to stay at the current high range for a while,” he said.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+), which meet on July 1, have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made, two OPEC+ sources said on Tuesday.

Brent has gained more than 45% this year on the back of supply cuts led by the OPEC+ and recovering demand amid easing COVID-19 restrictions, with some industry executives talking of crude returning to $100 for the first time since 2014.

“Behind the Thursday’s rally is also a view that there are still gaps in the talks over the 2015 Iran nuclear deal,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

Iran said on Wednesday the United States 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.

Source: Reuters, Oil prices updated by Shafaq News Agency

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