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Oil Edges Higher, U.S Crude Drawdown Fuels Demand Outlook

Oil prices climbed on Thursday after a sharp drawdown in U.S. crude, and gasoline stocks reinforced optimism of a quick recovery in fuel demand and on doubts about the future of the 2015 Iran nuclear deal that could end U.S. sanctions on Iranian crude exports.

Brent crude futures rose 9 cents, or 0.1%, to $75.28 a barrel by 0103 GMT, after increasing 0.5% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures gained 6 cents, or 0.1%, to $73.14 a barrel, after rising 0.3% on Wednesday.
oil performance chart
U.S WTI oil Index Performance Chart

Both benchmarks hit their highest since October 2018 on Wednesday, but they pared gains later in the session as energy traders locked in profit after the U.S. inventory report, Edward Moya, senior market analyst at brokerage OANDA, said in a report. Prices resumed climbing in Asia trade on Thursday.

U.S. crude inventories fell by 7.6 million barrels in the week to June 18 to 459.1 million barrels, their lowest since March 2020, the U.S. Energy Information Administration said. The drawdown was nearly double analysts’ expectations in a Reuters poll for a 3.9 million-barrel drop.

U.S. gasoline stocks fell by 2.9 million barrels in the week, against analysts’ expectations for an 833,000-barrel rise.

“Oil prices were lifted by the U.S. inventory data which confirmed the strong outlook for higher fuel demand in the second half of this year, backed by a recovery in road and air travel. Behind the rally is also a view that there are still gaps in the talks over the 2015 Iran nuclear deal,” Hiroyuki Kikukawa, general manager of research at Nissan Securities

Iran said on Wednesday the United States had agreed to remove all sanctions on Iran’s oil and shipping but Washington said “nothing is agreed until everything is agreed” in talks to revive the 2015 Iran nuclear deal.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+), which meet on July 1, have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made, two OPEC+ sources said on Tuesday.