Oil futures edged lower Thursday, pulling back from a 2-1/2 year high for Brent crude, as investors gauge signs of strengthening demand while keeping an eye on any potential response to recent price rises by OPEC+.
West Texas Intermediate crude for August delivery was down 10 cents, or 0.1%, at $72.98 a barrel on the New York Mercantile Exchange.
September Brent crude was off 10 cents, or 0.1%, at $74.42 a barrel on ICE Futures Europe. August Brent, the front-month contract, was off 9 cents, or 0.1%, at $75.10 a barrel, after closing Wednesday at the highest level for a front-month contract since October 2018.
Analysts said crude remains underpinned by data showing demand outpacing supply, including a weekly report on Wednesday from the Energy Information Administration said U.S. crude inventories fell by 7.6 million barrels for the week ended June 18. That marked the fifth consecutive decline reported by the EIA. It also pegged last week’s commercial crude oil stocks at a total of 459.1 million barrels, the lowest since the week ended March 6, 2020.
“The continuous draw in inventories reflects tightening in the market as demand ramps up from the likes of the U.S., China and Europe. Thanks to rapid and successful vaccine programs, the reopening of these economies has boosted fuel consumption, draining stockpiles,” said Sophie Griffiths, market analyst at Oanda, in a note.
But traders are also keeping a close eye on the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+ which is due to meet on July 1 to review production levels.
“The question is whether OPEC+ will allow this to continue when they meet next week. There’s a good chance some countries in the group of oil producers vote to increase oil production,” Griffiths said.
Source: Marketwatch