Oil extends gains, hovers near three-year peak on fresh signs of demand growth

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Oil extends gains, hovers near three-year peak on fresh signs of demand growth

On Thursday, both US and UK crude oil futures had extended their latest leg of blowout gains, holding forth close to their three-year peak reached yesterday, as a decline in US crude inventories alongside a 30-year-peak German retail activity had kept investors Panglossian about a further uprising in oil demands.

Aside from that, crude oil futures were also supported by a growing cloud flocking over the future of a 2015 Iran nuclear deal, which in effect would ease off US sanctions on Iranian crude. In point of fact, Tehran said on Wednesday that the US had agreed to ease all sanctions on its crude oil and shipping, however, Washington was quoted saying “nothing is agreed until everything is agreed,” casting fresh doubts over the deal.

In tandem, US crude inventories had collapsed to their lowest since March 2020 last week, as US refiners appeared to be swamping on a production boom to capitalize a multi-year high crude oil prices, while data from Germany had unveiled that the largest economy in the 26-member bloc had witnessed the steepest gains in retail activities in May since Germans had decided to smash the ‘Berlin Wall’ into smithereens about three decades earlier for better or worse, stoking prospects of a demand-surge in Europe in a near term.

Crude oil gathers traction as US inventories fall to lowest since March 2020

Citing statistics, in the day’s commodity market wind-down, UK crude futures settled 0.5 per cent higher to $75.56 per barrel after hitting a session-high of $75.78 a barrel earlier in the day, while US WTI (West Texas Intermediate) crude oil futures scheduled to be expired on July 24, added 0.5 per cent to $73.30 a barrel.

On Wednesday, both contracts had spiked to their highest level since October 2018. Meanwhile, citing optimism over a likely output hike from OPEC+ member states in a near term, Commerzbank analysts wrote in a client note, “Given the good sentiment and robust demand, OPEC+ is likely to find it easy next week to announce a further increase in production, at least for August, without jeopardizing the upswing enjoyed by the oil price”.