Buoyed by strong global oil demand growth and reduced OPEC supply, U.S. benchmark WTI jumped above the psychologically important US$50 threshold on Thursday, topping that level for the first time in five weeks and aiming for the highest closing since the end of May.
At 12:30pm EST today, WTI traded up 1.74 percent at US$50.16, while Brent was up 1.05 percent at US$55.74. Brent is now above the US$55 psychological level for the first time since May 25, when OPEC decided to extend the production cuts as-is in a move that largely disappointed a market that was expecting a firmer "whatever it takes" action.
Today is the fourth consecutive day of gains for oil prices that have been enjoying a good week, in which OPEC reported lower production for August, followed by the International Energy Agency's (IEA) assessment for strong demand growth.
On Tuesday, OPEC's Monthly Oil Market Report showed that production within the cartel dropped for the first time in four months. On Wednesday, the IEA published the most bullish oil report this year, saying that demand growth in Q2 was very strong and would continue to be robust. The IEA revised up its forecast for oil demand growth this year, to 1.6 million bpd from 1.5 million bpd.
Adding more fuel to the rally, the EIA reported later on Wednesday a huge draw in gasoline stocks. Gasoline inventories fell last week by 8.4 million barrels, largely in line with API's earlier estimate of a 7.896-million-barrel decline-and the largest gasoline draw on record.
In its latest Short-Term Energy Outlook, published on Tuesday, the EIA said that the effect of the supply disruptions on the Gulf Coast will last for a while, which will boost the uncertainty around oil and gas prices in the coming weeks. Related: OPEC's Latest Report Signals An Oil Price Rally
Oil prices will remain in the US$50-60 range, according to BP's chief executive Bob Dudley.
"We don't expect a spike up in prices nor do we expect a big drop in prices. So we're all trying to make our way in this world of between $50 and $60 and I would expect that to continue," Dudley told Reuters in an interview published on Thursday.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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