Oil prices hit new peaks on Wednesday with global benchmark Brent crude hitting its highest since January after a steep drawdown in U.S. fuel stockpiles helped offset some concerns of weaker demand from China. Brent was up $1.00, or 1.2%, at $87.17 a barrel, having earlier touched $87.65, its highest Jan. 27. West Texas Intermediate crude gained $1.13, or 1.4%, to $84.03. The U.S. benchmark touched $84.65, its highest level since November 2022. U.S. gasoline stocks fell by 2.7 million barrels last week, while distillate inventories, which include diesel and heating oil, dropped by 1.7 million barrels, government data showed, compared with analysts’ expectations in a Reuters poll for both to hold mostly steady.
“We’re seeing gasoline demand surge. It’s raising concerns about the tightness of inventories for gasoline, which are still below average,” said Phil Flynn, an analyst at Price Futures Group. Markets largely shrugged off a higher-than-expected 5.85 million-barrel build in U.S. crude stocks after a record drawdown the week before. The U.S. fuel stock drawdown helped offset some demand concerns after Chinese data on Tuesday showed crude oil imports in July fell 18.8 per cent from the previous month to their lowest daily rate since January. Supporting prices, however, were top exporter Saudi Arabia’s plans to extended its voluntary production cut of 1 million barrels per day for another month to include September. Russia also said it would cut oil exports by 300,000 bpd in September. “The latest recovery is mainly driven by the pledge of major producers, like Saudi Arabia and Russia, to keep supply subdued for another month,” said Charalampos Pissouros, senior investment analyst at broker XM.
Crude posted its sixth consecutive weekly gain last week, helped by a reduction in OPEC+ supplies and hopes of stimulus boosting oil demand recovery in China. On Tuesday, Saudi Arabia’s cabinet said it reaffirmed its support for precautionary measures by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to stabilise the market, state media reported.
