Oil prices rose early on Wednesday, driven by brighter economic prospects for the United States and continued recovery in oil demand in America and elsewhere in the world.
As of 9:04 a.m. EDT on Wednesday, ahead of the weekly inventory report by the U.S. Energy Information Administration (EIA), WTI Crude was up 1.04 percent at $73.61, and Brent Crude traded at $75.54, up by 0.99 percent on the day.
Prices found support late on Tuesday after the American Petroleum Institute (API) reported a draw in crude oil inventories of 7.199 million barrels for the week ending June 18. If the EIA confirms a draw today, it would be the fifth consecutive week of crude inventory draws in the United States, where demand for fuels continues to grow.
According to GasBuddy data, last week’s U.S. gasoline demand rose by 2.87 percent from the prior week to a new COVID high.
“The tightening in the US market continues to support the WTI/Brent spread. This spread now trades at a discount of around US$1.80/bbl, levels last seen back in November. The prompt WTI timespread also remains firmly in backwardation. It is currently trading at a little over US$0.80/bbl, reflecting the tightness in the US market,” ING strategists Warren Patterson and Wenyu Yao said on Wednesday.
In commodity markets, the energy sector “has increasingly become the go to commodities” while industrial metals are suffering what looks like a short-term setback, due to rising market intervention by Chinese authorities and reduced focus on reflation, Ole Hansen, Head of Commodity Strategy at Saxo Bank, said today.
OPEC+ is considering bringing more barrels to the market in August, which suggests that the group is confident the rebound in demand would absorb additional supply.
In another supportive voice for oil prices, OPEC Secretary General Mohammad Barkindo said on Wednesday at the meeting of the organization’s economic think-tank, the Economic Commission Board (ECB), that “the latest market developments point to much better conditions and improved outlooks” of the oil market and global economy.
By Tsvetana Paraskova for Oilprice.com
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