Nia Williams
(Reuters) – Oil prices hit their highest since April on Thursday, holding above $87 after data the previous day showed a drop in U.S. inventories.
Brent crude futures were up 21 cents, or 0.2%, at $87.55 a barrel by 1922 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 18 cents to $84.06 in thin trading during the U.S. Independence Day holiday.
On the previous trading day, Brent crude oil rose 1.3% to close at $87.34, the highest closing price since April 30.
The gains came after stocks fell more than expected. The U.S. Energy Information Administration (EIA) reported a $12.2 million decline in inventories. Analysts polled by Reuters had expected oil production to fall by 680,000 barrels. [EIA/S]
RBN energy analyst Martin King said traders were also looking at the war in Gaza and elections in France and the UK.
“Trade is calm and people are paying attention to the physical market and the geopolitical situation,” Kim said.
PVM analyst Tamas Varga said oil prices had fallen as much as 83 cents earlier but the decline was not expected to last given the weaker dollar and a brighter outlook for U.S. fuel demand following the EIA data.
However, German industrial orders unexpectedly fell in May, further showing that recovery in Europe’s largest economy is still far off.
U.S. data on Wednesday showed that the number of people filing for unemployment benefits for the first time rose last week, while the number of unemployed people also rose, adding to demand concerns.
In contrast, weak economic data could accelerate a rate cut by the Federal Reserve, which could support the oil market, analysts said.
On Thursday, Reuters reported that Russian oil producers Rosneft and Lukoil will significantly cut oil exports from the Black Sea port of Novorossiysk in July, according to two sources familiar with the loading plans.
At the same time, Saudi Arabia Saudi Aramco (TADAWUL:) cut the price of its flagship Arabian Light crude oil for Asia in August to $1.80 a barrel, above the Oman/Dubai average.
The potential price cut in Asia, which accounts for about 80% of Saudi Arabia’s oil exports, highlights the pressure on OPEC producers as non-OPEC supply continues to grow and the global economy faces headwinds.
Brent crude is expected to hit $90 a barrel this quarter, Swiss bank UBS said in a note to clients, citing OPEC+ production cuts and an expected decline in oil inventories.
