Oil prices rose on Thursday to their highest levels since late July after U.S. crude stocks dropped to their lowest in three years and the broader market received more clarity about the Fed's next policy moves.
As of 10:52 a.m. EDT on Thursday, WTI Crude traded above $73 a barrel, up by 1.19% at $73.15-its highest price since the end of July. Brent Crude prices were above $76 per barrel, having risen by 0.91% on the day at $76.88.
After the Fed signaled on Wednesday that it could begin tapering asset purchases as soon as November and potentially start raising interest rates as soon as next year, oil market participants turned their focus to global oil inventories, especially those in the United States.
Rising U.S. equity markets, with the S&P 500 opening higher on Thursday, and a weakening U.S. dollar also supported oil prices.
On Wednesday, the Energy Information Administration reported yet another crude oil inventory draw, of 3.5 million barrels, for the week to September 17.
"This takes total US crude oil inventories to just below 414MMbbls, which is the lowest level seen since October 2018," ING strategists Warren Patterson and Wenyu Yao said on Thursday.
The slow recovery of U.S. Gulf of Mexico crude oil production also adds a bullish factor to oil prices, although most of the production that was shut-in at peak Hurricane Ida impact is now back online.
The shape of the crude oil futures curve also points to a tightening market, Saxo Bank's strategy team said in a note early on Thursday.
"Time spreads points to an increasingly tight market with the Dec21-June22 Brent spread jumping to a fresh high above $4/b," the bank's strategists said.
The signs of a tightening market are the result of an ongoing recovery in demand and the risk that high gas prices could have a knock-on effect on oil markets due to switching to fuels other than natural gas, according to the bank.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More