Oil rising due to falling inventories in US

Oil prices were mixed on July 9 after a boost from a drop in US crude and gasoline inventories but were still set for a weekly decline on concerns that an OPEC+ impasse could swell global crude supplies, Report informs referring to Reuters.

The cost of a barrel of September futures for Brent oil amounted to $74.34 (+0.30 percent). A barrel of August futures for WTI crude was traded at $73.24 (+0.41 percent). The previous trading ended at $74.2 and $72.94, respectively.

Both benchmarks were headed for a loss of nearly 3 percent for the week, as traders remained worried that the collapse of talks between the Organization of the Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, could lead to a rise in crude supplies.

“A large decline in the US stockpile reinforced views that fuel demand was growing as the US driving season has begun,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

“Since there has not been any major lift in the US shale output, some investors became bullish despite the OPEC+ spat,” he said.

US crude and gasoline stocks fell, and gasoline demand reached its highest since 2019, the US Energy Information Administration said on July 8, signaling increasing strength in the US economy.

Crude inventories fell by 6.9 million barrels in the week to July 2 to 445.5 million barrels, the lowest since February 2020, and more than the expected 4 million-barrel drop estimated in a Reuters poll. Gasoline stocks fell by 6.1 million barrels, exceeding expectations for a 2.2 million-barrel drop.

Even with oil prices rising toward $75 a barrel, US shale producers keep their pledges to hold the line on spending and keep output flat, a departure from previous boom cycles.

Still, some traders feared members of the OPEC+ group could be tempted to abandon output limits that they have followed during the pandemic due to the breakdown in discussions between major oil producers Saudi Arabia and the United Arab Emirates.

The two Gulf OPEC allies are at odds over a proposed deal that would have brought more oil to the market.

Russia was trying to mediate to help strike a deal to raise output, OPEC+ sources said. The United States had high-level conversations with officials in Saudi Arabia and the UAE, the White House said.

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