Oil prices rose, during trading today, Wednesday, June 8, 2022, amid expectations of a decrease in US oil stocks.
The rise coincides with expectations of increased demand for fuel in the upcoming driving season, as the US Energy Information Administration raised its forecasts for oil demand this year.
Oil Prices Today
The price of the Brent crude futures contract – for delivery next August – rose by 0.85%, to reach $ 121.81 a barrel, after closing yesterday, Tuesday, at its highest level since May 31.
The price of future contracts for West Texas Intermediate crude – for delivery next July – rose by 0.76%, recording $ 120.72 a barrel, after reaching its highest settlement since March 8 in the previous session, according to data seen by the specialized energy platform.
Oil prices ended their trading yesterday, Tuesday, with a rise in volatile trading, as the market reduced risk sentiment against fears of supply shortages and the possibility of higher demand after China eased restrictions on the Corona virus.
US Oil Stocks
Analysts expected a further decline in US oil inventories, although gasoline and distillate stocks may rise, according to a Reuters poll.
“The oil market is expected to remain tight, as the supply side will continue to tell the story of low inventories,” said analyst Edward Moya.
He added that crude oil inventories are likely to record more clouds, with the intensification of the driving and holiday season in the United States.
However, figures released by the American Petroleum Institute showed a rise in inventories of crude oil and petroleum products in the United States, last week.
The US Energy Information Administration will announce inventory levels last week, at 02:30 PM GMT today, Wednesday.
Global Oil Supply
The World Bank on Tuesday cut its global growth forecast for 2022 by a third, warning that Russia’s invasion of Ukraine has compounded the damage from the coronavirus pandemic and that many countries are now facing a recession.
Meanwhile, global supplies of crude oil and petroleum products remain tight, boosting diesel profit margins for Asian refiners to record levels, as Western sanctions hamper exports from Russia.
The CEO of global commodity trading company Trafigura said oil prices could soon reach $150 a barrel and rise this year, with demand likely to be destroyed by the end of the year.
Most refineries globally are operating near capacity to meet rising demand as they recover from the pandemic and make up for lost Russian supplies.
JPMorgan analysts estimate that Russia has cut between 500,000 and 700,000 barrels per day of oil product exports, because it now finds marketing fuel more difficult than marketing crude oil.
“Unless new production capacity emerges in the Middle East more quickly than we expect, or if China decides to raise its export caps, the shortage of petroleum products will worsen as the demand for transportation fuels increases during the Northern Hemisphere summer,” they said in a statement.
On Tuesday, China released the first batch of product export quotas aimed at reducing soaring domestic inventories, which rose as demand slumped due to epidemic shutdowns.
Despite recent additions to quotas, volumes are still significantly lower than they were last year.