Oil extends gain amid shrinking US crude stockpiles

July 11, 2024 (MLN): Oil climbed for the second consecutive session amid signs of growing demand.

Brent crude advanced to $85.67 per barrel, up by 0.69% on the day.

While West Texas Intermediate crude (WTI) was at $82.66 per barrel, up by 0.68% on the day.

Nationwide US stockpiles fell by 3.4 million barrels last week, with gauges of jet fuel and gasoline consumption both rising as the summer travel season continues, as Bloomberg reported.

Oil’s push higher came as global equities rallied, with US shares at a new high ahead of inflation data later Thursday that may fan investors’ expectations for interest-rate cuts from the Federal Reserve.

Crude has rallied this year, supported by OPEC+ supply cutbacks, although relatively muted moves have caused volatility to decline to six-year lows this month.

While some members of the cartel are continuing to pump above agreed limits, key producer Russia made noticeable reductions in June.

“The inventory drawdown was a reflection of strong summer demand, coming partly from the surge in air travel,” and that’s driving prices for now, said Charu Chanana, market strategist for Saxo Capital Markets Pte.

While hopes of an imminent Fed pivot were also fueling optimism, much still depended on the state of the US labor market as Powell has pointed to, she said.

Widely watched timespreads show signs of underlying strength, Bloomberg said.

The gap between the two nearest Brent contracts, or prompt spread, was 89 cents a barrel in a bullish, backwardated structure, with the front-month contract at a premium to the subsequent month.

That compares with 38 cents a month ago.

Traders will be watching for a monthly market snapshot from the International Energy Agency later on Thursday for its assessment of global crude balances in this half of the year.

Copyright Mettis Link News