Oil Hovers Near 13-Week High, Trades Above $123 A Barrel

Brent crude futures for August rose 12 cents to $123.70 a barrel.

Singapore:

Oil prices edged closer to a 13-week high on Thursday on strong demand in the world’s top consumer, the United States, while demand in China is expected to rebound as COVID-19 restrictions are eased in major cities.

Brent crude futures for August were up 12 cents to $123.70 a barrel by 0033 GMT, while US West Texas Intermediate crude for July was up 6 cents at $122.17 a barrel.

Both benchmarks closed at their highest level since March 8 on Wednesday, matching levels seen in 2008.

Data from the Energy Information Administration (EIA) showed the United States posted a record decline in strategic crude reserves, even as commercial stocks rose last week.

US petrol stocks fell unexpectedly, indicating a resiliency in demand for motor fuels during peak summer despite skyrocketing pump prices.

ANZ analysts said in a note that EIA data showed apparent demand for all oil products in the United States rose to 19.5 million barrels per day (bpd), while gasoline demand rose to 8.98 million bpd.

Investors will check May trade data from China on Thursday for signs of demand in the world’s No. 2 oil consumer. Shanghai, the country’s largest business hub, emerged from a two-month lockdown on 1 June.

“China’s reopening has fueled demand optimism,” CMC Markets analyst Tina Teng said in a note.

“Oil price can go to peak of March above $130 in very tight supply market.”

Efforts by OPEC oil producers to boost production are “not encouraging”, UAE Energy Minister Suhail Al-Majroi said on Wednesday, noting that the group was currently 2.6 million bpd short of its target.

Last week, the group agreed to accelerate production growth to offset lower fuel prices and slow inflation. But the move would leave producers with little spare capacity, and almost no room to make up for a major supply shortfall.

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