Oil price edges higher on tight supply and expected demand uplift

By Rowena Edwards

LONDON (Reuters) -Oil prices rose on Wednesday, buoyed by tight supplies and the prospect of rising demand from the summer driving season in the United States, the world’s biggest crude consumer.

Brent crude futures for July rose for a fifth session running, gaining $1.69, or 1.5%, to $115.25 a barrel by 0940 GMT.

U.S. West Texas Intermediate (WTI) crude for July delivery rose $1.86, or 1.7%, to $111.63.

Oil prices are gaining support from tight gasoline supply, with inventories of the refined oil product down by 4.2 million barrels last week, market sources said on Tuesday, citing American Petroleum Institute figures.

Stockpiles data from the U.S. government is due on Wednesday, with analysts polled by Reuters poll expecting U.S. crude oil and gasoline inventories to have fallen last week. [API/S] [EIA/S]

“Just ahead of the summer driving season, U.S. gasoline stocks find themselves at their seasonally lowest level since 2014,” said Commerzbank analyst Carsten Fritsch.

U.S. Memorial Day weekend travel is expected to be the busiest in two years, causing fuel demand to rise as more drivers hit the road and shake off coronavirus pandemic restrictions despite high fuel prices.

At the same time, global crude supplies continue to tighten as buyers avoid oil from Russia, the world’s second-largest exporter, after the invasion of Ukraine, which Moscow calls a “special military operation”.

France’s new foreign minister on Tuesday said she was optimistic on the prospect of securing agreement on a European Union sanctions package that would phase out Russian oil imports to the bloc despite current opposition in some quarters.

“With explicit bans on importing Russian crude in the U.S. and UK, and oil companies reluctant to buy even without formal legal obstacles, self sanctions are still causing supply shortages,” said SPI Asset Management managing partner Stephen Innes in a note.

A record amount of Russia’s Urals crude oil is sitting in vessels at sea as it struggles to find buyers.

On the flip side is the the strict approach to the COVID-19 pandemic from China, the world’s biggest oil importer. Beijing has imposed new curbs while Shanghai plans to keep most restrictions in place this month.

(Reporting by Rowena EdwardsAdditional reporting by Arathy Somasekhar in Houston and Isabel Kua in SingaporeEditing by David Goodman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Source link

Recent Posts

Scan to Download
ios&Android APP

Open trading account and start trading!

Join our happy customers