Oil prices were relatively unchanged on Friday, but were poised to rise for a second consecutive week. This was driven by signs of improving demand and declining oil and fuel inventories in the United States, the world’s largest oil consumer.
Brent crude futures for August delivery dipped slightly by 15 cents to $85.56 per barrel by 03:56 GMT, after increasing 0.8 percent in the previous session. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures for August delivery were down 14 cents to $81.15 per barrel. The July WTI contract expired on Thursday at $82.17 per barrel, up 0.7 percent.
Factors driving crude oil price increases
Prices have risen approximately 5 percent since the start of the month, reaching the highest level in over seven weeks. This was attributed to several factors, including the seasonal demand increase, as shown by the latest data from the U.S. Energy Information Administration (EIA), renewed confrontation in the Middle East, and the approaching hurricane season, which could contribute to price strength through the summer, according to Citi analysts.
The EIA data released on Thursday revealed that total product supplied, a proxy for U.S. demand, increased by 1.9 million barrels per day (bpd) on the week to 21.1 million bpd. Additionally, the data showed a drawdown of 2.5 million barrels in U.S. crude stockpiles in the week ending June 14, to 457.1 million barrels, surpassing analysts’ expectations of a 2.2 million-barrel decline. Gasoline inventories also fell by 2.3 million barrels to 231.2 million barrels, contrary to forecasts for a 600,000-barrel build.
Improved demand outlook in Asia
Improved demand prospects in Asia also contributed to the upward price momentum, as oil refineries across the region are bringing back some idled capacity after maintenance, according to analysts at ANZ Research.
Countering the price increases were the U.S. data released on Thursday, which showed a decline in new unemployment claims. This development may lead the Federal Reserve to maintain interest rates unchanged, as higher interest rates typically limit economic growth and, in turn, oil demand.
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