Plummeting U.S. Stockpiles Reverse Negative Sentiment, Oil Prices Climb

by Ship & Bunker News Team
Thursday June 20, 2024

Crude traders on Thursday yet again felt optimistic that the U.S. Federal Reserve despite its repeated cautionary warnings would cut interest rates, due to signs of a cooling jobs market – and as a result, oil prices rose modestly.

As of 1349 GMT, Brent rose 78 cents to $85.85 per barrel, and West Texas Intermediate climbed 70 cents to $82.27.

Prices were said to have also been supported by government data showing U.S. crude stockpiles declining by 2.55 million barrels, in stark contrast to the American Petroleum Institute on Tuesday calculating a 2.264 million barrel increase.

Distillate inventories, which includes diesel, dropped by 1.7 million barrels, while analysts expected a 261,000 barrel increase.

But Patrick de Haan, head of petroleum analysis at GasBuddy, described the drawdowns as the "wrong trifecta" and said it would result in higher prices at the pump for consumers already pummelled by the effects of rampant inflation.

Still, the tentative optimism expressed by both the analyrtical and trading communities continued on Thursday; JPMorgan commodities analysts wrote that a summer boost in oil demand, refinery runs plus extended production cuts by the Organization of the Petroleum Exporting Countries (OPEC) meant that "oil balances should tighten and inventories should begin to draw during the summer months."

This followed earlier observations from the likes of Tamas Varga, analyst at PVM, who said, "There are green shoots that indicate a more optimistic outlook," and added that Brent's recent resurgence "shows genuine optimism that the global oil balance will eventually tighten."

Bloomberg noted that "Key timespreads have ballooned, indicating stronger near-term demand, while refiners in Asia are restoring some capacity following maintenance despite weak margins, boosting crude consumption."