Oil prices remained stable during Asian trading on Friday, poised for a fourth consecutive week of gains, holding near their highest levels since late April. This surge is driven by strong summer fuel demand expectations and supply concerns.
Brent crude futures, which have risen 7% over the past four weeks, slipped slightly by 2 cents to $87.41 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures, having climbed 9% in the same period, edged up by 9 cents to $83.97 per barrel.
With the U.S. market closed for the Fourth of July holiday on Thursday, trading volume was low, and there was no settlement for WTI. Despite the holiday lull, oil prices were bolstered by strong mobility indicators and escalating geopolitical tensions in the Middle East, as noted by ANZ Research analysts.
The U.S. Energy Information Administration (EIA) reported a significant drawdown of 12.2 million barrels in inventories last week, far exceeding analysts’ expectations of a 700,000-barrel draw. This substantial reduction in oil stockpiles has further supported market sentiment.
Additionally, U.S. data released on Wednesday indicated an increase in first-time applications for unemployment benefits and a rise in jobless numbers. Analysts suggest this could accelerate interest rate cuts by the U.S. Federal Reserve, potentially benefiting oil markets.
On the supply side, Russia’s oil producers Rosneft and Lukoil announced a sharp reduction in oil exports from the Black Sea port of Novorossiisk in July. Concurrently, Saudi Arabia’s Saudi Aramco lowered the price of its flagship Arab Light crude for August sales to Asia, highlighting the pressure faced by OPEC producers due to growing non-OPEC supply.
Traders are also closely monitoring developments in the Gaza conflict and upcoming elections in France and the United Kingdom, which could impact market dynamics.
Overall, oil prices are set to continue their upward trajectory, driven by strong demand and ongoing supply constraints.