July 25, 2024
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Oil Prices Rise on Strong U.S. Demand and Supply Concerns

Oil prices climbed in early trading on Thursday, bolstered by robust demand in the United States following a significant decline in gasoline stocks and unexpected drops in crude inventories.

According to Reuters, supply worries persisted amidst Ukrainian attacks on Russian refineries, further supporting the upward trajectory of oil prices.

Brent futures for May edged up by 11 cents, or 0.13%, reaching $84.14 a barrel, while April U.S. West Texas Intermediate (WTI) crude rose by 10 cents, or 0.13%, hitting $79.82 per barrel.

Both contracts had surged approximately 3% to a four-month high on Wednesday, driven by the optimistic U.S. demand outlook and escalating geopolitical tensions.

ANZ analysts highlighted the impact of robust U.S. product exports, leading to a decline in gasoline stocks to a three-month low.

“Strong US products exports led gasoline stock to fall to a three-month low. Rising gasoline prices are supporting crack spread for refiners. Market also reacted to increasing geopolitical risks after a Ukrainian drone attacked a Russian refinery.”

According to the Energy Information Administration (EIA), U.S. gasoline inventories fell for the sixth consecutive week, plummeting by 5.7 million barrels to 234.1 million barrels, significantly surpassing expectations for a 1.9 million-barrel draw.

Moreover, stocks of motor fuel at the U.S. Gulf Coast declined to their lowest level since November 2022, while finished motor gasoline supplied, a demand indicator, experienced a slight uptick to over 9 million barrels per day for the first time this year.

Senior market analyst at OANDA, Kelvin Wong, noted that the recent surge in oil prices was attributed to tighter supply conditions.

“The recent push-up in oil prices has been attributed to a tighter supply-side factor, and given next week’s risk event (the outcome of the Fed’s FOMC meeting on 20 March) we may see some consolidation at the US$80.55/81.65 per barrel resistance zone for WTI crude.”

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