Oil is trading at its highest level since April, up almost 1% on Wednesday as inventory data for crude oil and fuel products, showing strong demand from the US, the world’s largest fuel consumer, offset demand concerns elsewhere.
Brent crude futures for October delivery rose 76 cents, or 0.90%, to $85.67 a barrel at 0407 GMT. Likewise, West Texas Intermediate crude (WTI) for September rose 76 cents, or 0.93%, to $82.13 a barrel.
U.S. oil inventories fell 15.4 million barrels in the week ending July 28, compared to analysts’ estimates of a decline of 1.37 million barrels, according to the American Petroleum Institute (API).
If the EIA figures, due to be released at 14:30 GMT on Wednesday, match the declines in the industry, it would be the largest drop in US crude inventories regarding recorded data since 1982.
API data showed gasoline inventories fell by 1.7 million barrels, compared to estimates of a 1.3 million barrel decline. Distillate stocks fell by 510,000 barrels, compared to analysts’ estimates of an increase of 112,000 barrels. Both are indicators of strong urgent fuel demand in the US.
Demand concerns continue in China. Concerns that oil purchases may slow as prices rise in China, the world’s largest oil importer, and weak PMI data released this week indicated that demand for fuel may be weaker than expected, limiting price increases during the session.
Globally seasonal demand for transportation fuels and supply disruptions in oil-producing countries have led to higher oil prices.
Crude oil stocks began to fall as the supply, which was limited by the deep production cuts that provided price support by Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), remained below the demand.
Saudi Arabia is expected to extend the 1 million barrels per day (bpd) voluntary production cut into September for another month at Friday’s OPEC+ meeting.
It is estimated that oil prices may continue to rise, but will not exceed $90 per barrel due to recession pressures in some regions such as Europe. Moreover, after the demand peak in the summer months has passed, the upward trend in oil prices may fade.
