In the European morning hours on Thursday, crude oil futures saw a slight uptick as market participants brushed off discouraging US oil inventory figures that initially dampened bullish sentiment.
Front-month Aug24 ICE Brent futures were observed trading at $85.67 per barrel at 0840 GMT, up from Wednesday’s settlement of $85.25 per barrel. This followed unsuccessful attempts by the market to consolidate above the $86 per barrel threshold.
Simultaneously, Aug24 NYMEX WTI traded at $81.29 per barrel, compared to Wednesday’s close at $80.90 per barrel.
Data released by the US Energy Information Administration (EIA) on Wednesday revealed an unexpected increase in commercial crude oil inventories last week, coinciding with a second consecutive decline in refinery throughputs.
Commercial inventories rose by 3.6 million barrels through June 21, diverging from expectations of a 2.8 million barrel decrease, with non-government stockpiles now totaling 460.7 million barrels, up 1.5% year-on-year.
US gasoline inventories also climbed last week as implied demand dropped below 9 million barrels per day (bpd), despite increased output while refinery operations scaled back for the second week.
Commenting on these developments, ANZ commodity strategist Daniel Hynes remarked, “The market was particularly disappointed by the surge in fuel product inventories. Gasoline stocks surged by 2,654,000 bpd despite the onset of the summer driving season. Subsequently, implied demand for road fuel declined by 390,000 bpd to 8.97 million bpd.”
Gasoline inventories reached a three-month high of 233.9 million barrels, marking the fourth increase in five weeks and standing approximately 5% above last year’s levels.
Despite these factors, crude oil benchmarks remained within a relatively narrow range, supported by stringent OPEC+ supply management, which has kept the market in deficit throughout the latter half of 2024.
Ole S Hansen, Head of Commodity Strategy at Saxo Group, observed, “Crude oil continues to trade within a tightening range, maintaining a pattern of lower highs and higher lows since Q4-2022. WTI futures contracts have averaged around $79 per barrel over the past year, underscoring how OPEC+’s production curbs since April last year have contributed to price stability.”
This stability reflects ongoing efforts to manage production and stabilize global oil markets amidst fluctuating demand and supply dynamics.
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