Oil Rose Buoyed by Dropping U.S. Crude Inventories

Crude oil prices were close to multi-year highs on June 17. The prices were buoyed by declining U.S. crude inventories and broadly shrugging of a stronger U.S. dollar. Brent crude oil futures dipped by 0.2%, which equals 20 cents, and traded at $74.19 a barrel. Remarkably, in the earlier session, Brent crude reached their highest since April 2019.

U.S. crude oil futures decreased by 0.1% or 13 cents and traded at $72.02 a barrel. Remarkably, in the previous session, crude oil hit its highest since October 2018.

Meanwhile, the U.S. dollar witnessed its strongest since day gain in 15 months. The gain came after the Federal Reserve signaled it might raise interest rates at a much faster pace than anticipated.

The firmer dollar makes oil priced in dollars more expensive for holders of other currencies, potentially weighing on demand.

Data from the Energy Information Administration (EIA) revealed that the U.S. crude oil stockpiles in the world’s largest consumer declined sharply last week. It was prompted as refineries increased operations to their highest since January 2020, signaling continues improvement in demand.

However, U.S. crude oil supply data from the U.S. Energy Information Administration (EIA) limited the oil’s losses.

The EIA data recorded a draw of 7.355 million barrels for the week to June 11. The draw was larger than the 3.290-million-barrel draw in forecasts prepared by Investing.com and the 5.241-million-barrel draw shown during the previous week.

Oil traders say demand is likely to return to pre-COVID levels in Q2 2022

Crude oil supply data from the American Petroleum Institute the day before revealed a draw of 8.537 million barrels.

Additionally, boosting prices, refinery throughput in China, the world’s second-biggest oil consumer, increased by 4.4% in May from May 2020 to an all-time high.

The world’s largest oil traders announced this week that they saw the prices staying above $70 a barrel. They added that demand is expected to return to pre-COVID levels in the second half of the following year.

Remarkably, Iran is heading to presidential polls on June 18, with hardline judiciary chief Ebrahim Raisi among the front runners.

According to Commerzbank, the outcome of tomorrow’s presidential elections in Iran is also expected to lend support to the oil price.

A U.S. government report Wednesday offered the market its latest bullish fillip. Domestic crude stockpiles are falling as refinery demand boosts. Saudi Energy Minister Prince Abdulaziz bin Salman announced that the cautious approach taken by OPEC+ to reviving supply was paying off. It means that he’s sticking to that position, with the group scheduled to meet on July 1 to decide its next steps.