Oil Prices Extend Gains to Near Seven-Week High

Oil Prices Extend have been on an upward trajectory, reaching near seven-week highs. This surge is driven by expectations of a decline in global crude stocks in the third quarter due to increased fuel demand during the summer. However, recent data from the American Petroleum Institute (API) indicated a rise in US crude stocks, adding a layer of complexity to the market dynamics.

Oil Prices Overview

On Thursday, oil prices in European trade continued their gains after a brief pause, approaching seven-week highs. The market is anticipating that global crude stocks will decrease in the third quarter due to rising fuel demand in the summer season.

Current Price Movements

  • US Crude: Increased by 0.4% to $80.89 a barrel, with a session-low at $80.43 a barrel.
  • Brent Crude: Rose by 0.35% to $85.44 a barrel, with a session-low at $84.97 a barrel.
  • On Wednesday, US crude prices fell by 0.15%, breaking a three-day winning streak and pulling away from the seven-week high of $81.12.
  • Similarly, Brent crude fell by 0.1% on Wednesday, ending a three-day winning streak.

Market Expectations and Influences

The rise in oil prices is primarily driven by the expectation that global crude stocks will decline significantly in the third quarter as summer demand peaks. Analysts from RBC Capital Markets predict a drop in global crude stocks by 850 thousand barrels per day (bpd) during this period.

Factors Contributing to Increased Demand

Global central banks, including those in Canada, Europe, and Switzerland, are continuing to ease their monetary policies and cut interest rates. These measures are expected to stimulate fuel demand and overall economic growth, further supporting the rise in Oil Prices Extend.

US Crude Stock Data

Initial data from the API showed an unexpected increase in US crude stocks for the week ending June 14, with stocks up by 2.3 million barrels. This contrasts sharply with analysts’ expectations of a 2.2 million barrel decrease.

Detailed Stock Changes

  • Crude Stocks: Increased by 2.3 million barrels.
  • Gasoline Stocks: Fell by 1.077 million barrels.
  • Distillate Stocks: Rose by 538 thousand barrels.

Awaited Data from EIA

Investors are now keenly awaiting the official inventory and production data from the Energy Information Administration (EIA), which is due later today. This data will provide further clarity on the current state of US crude stocks and production levels.

Conclusion

The global oil market is currently experiencing a bullish phase, driven by expectations of higher fuel demand and lower global crude stocks in the third quarter. However, the recent API data indicating a rise in US crude stocks has introduced some uncertainty. Market participants are now looking towards the upcoming EIA report for more definitive insights.