Brent crude trades above $87, setting highest levels since April By Reuters
Written by Nia Williams
(Reuters) – Oil prices hit their highest level 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. US West Texas Intermediate (WTI) crude futures were up 18 cents at $84.06 in trade dampened by the US Independence Day holiday.
Earlier, Brent gained 1.3% to settle at $87.34, its highest close since April 30. WTI, meanwhile, was settled at an 11-week high of $83.88.
Those gains followed a bigger-than-expected decline in stocks. The US Energy Information Administration (EIA) reported that 12.2 million will be drawn from stocks. Analysts polled by Reuters had expected a draw of 680,000 barrels. [EIA/S]
Traders were also tracking the war in Gaza and elections in France and the United Kingdom, said RBN Energy analyst Martin King.
“Trading is quiet and people are looking at the physical market and the landscape,” King said.
Oil prices were earlier down 83 cents, but the dip was expected to be short-lived due to a weaker dollar and a brighter outlook for US fuel demand after the EIA data, said PVM analyst Tamas Varga.
However, German industrial orders unexpectedly fell in May, adding to signs that the recovery in Europe’s major economies is still struggling.
Demand concerns were raised by US data on Wednesday showing that initial claims for US jobless benefits rose last week and the number of unemployed also rose.
Conversely, weak economic data could accelerate interest rate cuts by the US Federal Reserve, analysts say, which could support oil markets.
On Thursday, Reuters reported that Russian oil producers Rosneft and Lukoil will significantly reduce oil shipments to the Black Sea port of Novorossiisk in July, according to two sources familiar with the loading schedule.
Meanwhile, Saudi Arabia Saudi Aramco (TADAWUL:) cut the price of its flagship Arab light crude to sell in 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 oil exports, underscores the pressure OPEC producers are facing as non-OPEC supply continues to grow while the global economy struggles.
Swiss bank UBS expects Brent crude to reach $90 a barrel this quarter, it said in a note to clients, citing OPEC+ production cuts and an expected drop in oil inventories.
