The American Petroleum Institute announced U.S. crude inventories dropped 8.5 million barrels, and two market sources spoke more than analysts forecast. Official Energy Information Administration numbers are out at 1430 GMT.
Brent crude was higher 15 cents, or 0.2%, at $74.14 a barrel by 1330 GMT. Earlier it touched $74.73, the highest after April 2019. U.S. crude slid 2 cents to $72.10, hitting $72.83, the highest since October 2018.
Demand increase is outpacing supply and will proceed to do so over the following months, stated Stephen Brennock of oil broker PVM.
Brent Demand Should Increase
Brent has increased 44% this year, boosted by supply cuts started by the Organization of the Petroleum Exporting Countries and partners, perceived as OPEC+. As a result, a demand increase should gather speed in the second half.
Notwithstanding some easing of last year’s record production cuts made when the epidemic took hold, OPEC+ is still withholding millions of barrels of daily supply from the market.
Even non-energy traders are putting bets that oil prices will grow, stated Edward Moya, senior market analyst at brokerage OANDA.
On Tuesday, executives from significant oil traders stated they anticipated prices to remain over $70. Moreover, they think that demand will revert to pre-epidemic levels in the second half of 2022.
At the same time, the possibility of an imminent increase in Iranian oil exports looks less likely, analysts stated. Indirect talks between Tehran and Washington on returning the 2015 nuclear accord resumed in Vienna on Saturday.
Ongoing attempts to restore the Iranian nuclear deal have so far disappointed to bear any fruits, PVM’s Brennock said.