Oil Prices Surge as US Refineries Boost Processing
In a thrilling turn of events, oil prices soared on Thursday as crude stocks took a nosedive following US refineries revving up their processing game. Gasoline inventories also saw a decrease, hinting at a surge in demand, as reported by Reuters.
Brent futures climbed 62 cents, a whopping 0.73 percent, reaching $85.70 a barrel by 9:20 a.m. Saudi time. US West Texas Intermediate crude also joined the party, rising 60 cents, or 0.73 percent, to $82.70 a barrel.
DBS bank energy sector team lead Suvro Sarkar spilled the beans to Reuters, attributing the bounce back to the ongoing drawdowns in US inventories, as revealed by the Energy Information Administration.
US crude inventories plummeted by 3.4 million barrels to 445.1 million barrels in the week ending July 5, leaving analysts in awe as they had expected a mere 1.3 million-barrel draw, according to a Reuters poll.
Gasoline stocks also experienced a significant drop, shedding 2 million barrels to 229.7 million barrels, surpassing analysts’ expectations of a 600,000-barrel draw during the US Fourth of July holiday week.
Despite minimal supply disruptions at refineries and offshore production facilities due to hurricane Beryl, gains were somewhat restrained.
OPEC maintained its prediction of robust growth in global oil demand for 2024 and next year, asserting that sturdy economic growth and increased air travel would boost fuel consumption during the summer months.
Sarkar predicted a plethora of bullish factors outweighing the bearish ones, providing a firm foundation for oil prices in the near term.
On the other hand, all eyes are on the US inflation data set to be released this week, including the Consumer Price Index on Thursday and the Producer Price Index report on Friday, which could potentially dictate the market’s direction.
Anticipation for a 25-basis-point rate cut by September surged to 74 percent, up from around 70 percent on Tuesday and a mere 45 percent a month ago, according to CME’s FedWatch.
Lower interest rates translate to reduced borrowing costs, potentially stimulating economic activity and oil demand.
Federal Reserve Chair Jerome Powell addressed concerns on Wednesday, emphasizing that interest rate decisions will be made as necessary, debunking the notion that a September rate cut could be perceived as a political move ahead of the fall presidential election.