Oil crept higher as industry data pointed to a substantial decline in US crude stockpiles and fuel sales in India showed signs of recovering.
Inventories dropped by 8.54 million barrels last week, according to people familiar with the American Petroleum Institute’s data. That would take levels to the lowest in over a year if confirmed by government data due later Wednesday. Oil is also being helped higher by positive demand signals from Asia.
Indian gasoline and diesel sales rebounded in the first half of June as the number of new Covid-19 cases in the country slowly started to ease. China processed a record volume of crude oil last month on a barrels a day basis, according to Bloomberg calculations based on data published by the National Bureau of Statistics.
Global oil benchmark Brent rose 0.2%, after earlier approaching $75 a barrel. West Texas Intermediate also increased 0.2%. Prices pared some earlier gains in tandem with equity markets.
Oil’s rally has been reinvigorated this month as leading economies continue to reopen, aided by widespread vaccine programs. That’s boosting worldwide energy demand just as the Organization of Petroleum Exporting Countries and its allies maintain a cautious approach to boosting supply. Executives from both Glencore Plc and Vitol Group said Tuesday that they see further gains in oil.
“With oil demand expected to rise strongly this summer, and supply growth lagging demand growth, oil inventories will likely fall faster over the coming months,” said UBS Group AG analyst Giovanni Staunovo. “As such, we still see prices moving higher over the next three months.”
{{/usCountry}}“With oil demand expected to rise strongly this summer, and supply growth lagging demand growth, oil inventories will likely fall faster over the coming months,” said UBS Group AG analyst Giovanni Staunovo. “As such, we still see prices moving higher over the next three months.”
{{/usCountry}}Lifting Restrictions
In the US -- where shale producers have refrained from substantial increases in output even as prices march higher -- anti-virus measures are being steadily withdrawn. On Tuesday, California fully reopened its economy while New York lifted its remaining restrictions.
The market’s pricing structure reflects the overall bullish tone, with near-dated prices above those further out. Brent’s prompt timespread was 70 cents a barrel in backwardation, up from 47 cents a week ago. The upcoming December contract was $5 more costly than the price for the same month in 2022.
Crude’s latest upswing has come ahead of a potentially pivotal Federal Reserve policy announcement later Wednesday. While the US central bank is not expected to alter interest rates, it could start preliminary discussions about when and how to scale back bond purchases. Any moves on that front could affect the value of the dollar and demand for commodities, including oil.