Oil prices have rallied in recent days, as global demand continues to recover while OPEC+ keeps a tight rein on supply and speculators buy the oil complex, seeing few downside risks.
Over the past week, prices have jumped amid bullish outlooks on demand from OPEC and the International Energy Agency (IEA), while the talks in Vienna about the possible return of the United States and Iran to the so-called nuclear deal are dragging on for a sixth round and are unlikely to result in an agreement before the presidential election in Iran on June 18.
Not only has the Brent price jumped to above $70, the U.S. benchmark has also risen to over $70 in recent days, hitting $72 a barrel early on Wednesday.
As of 9:53 a.m. EDT, ahead of the weekly inventory report from the EIA, WTI Crude was up 0.22 percent at $72.25 and Brent Crude was trading up 0.50 percent at $74.36.
Following bullish outlooks on global demand in recent days, oil prices continued to move higher on Tuesday, after the American Petroleum Institute (API) reported a large draw in crude oil inventories of 8.537-million barrels for the week ending June 11. Analysts had predicted a much smaller draw of 3.290 million barrels for the week.
"If confirmed by the EIA later today it would be the largest drop since January and the fourth consecutive decline," Saxo Bank's Head of Commodity Strategy Ole Hansen said earlier on Wednesday.
"Speculators remain strong buyers in the belief downside risks are limited with OPEC+ keeping supplies tight at a time of rising demand," Hansen added.
ING strategists Warren Patterson and Wenyu Yao said today:
"While the recent move higher in the oil market has been driven by optimism over the demand outlook, refinery cracks suggest that the rally in crude oil may be getting a bit ahead of itself. If the demand story was as optimistic as the move in crude oil suggests, you would think that the move higher in prices would have been led by the refined product market."
"If this strength is sustained until early next month, it only increases the likelihood that OPEC+ agree on some aggressive production increases when they meet on 1 July," they said.
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