Oil Up As Traders Reassess U.S. Crude Stocks, Now Decide That Inventories Are Tight

Meanwhile, analysts continue to obsess over tariff ramifications: File Image/Pixabay

An apparent reinterpretation of data was reportedly the reason why oil traders, who in the previous session were worried about oversupply, on Thursday switched to being concerned about inventory tightness – and as a result, crude prices escalated by about 1.5 percent.

Brent settled up $1.00, or 1.4 percent, at $69.52 per barrel, while West Texas Intermediate settled up $1.16, or 1.7 percent, at $67.54 per barrel.

On Wednesday, traders had caused crude prices to drop due to Energy Information Administration figures showing that U.S. gasoline stocks rose by 3.4 million barrels last week, compared with expectations for a 1 million barrel draw; distillate stockpiles rose by 4.2 million barrels, however, crude inventories fell by 3.9 million barrels to 422.2 million barrels over the same time frame.

Andrew Lipow, president of Lipow Oil Associates, said, "I think investors are disappointed to see gasoline demand fall just after July 4 as we are now in the peak summer driving season."

On Thursday, traders focused not on the gasoline figures but the massive crude inventory drop, and they were presumably further bolstered by the sentiment expressed by the International Energy Agency, which said oil output increases were not leading to higher inventories and that demand for more oil was robust.

Further, Bloomberg pointed out that supply concerns were also reflected in the forward curve for crude: "It is currently trading in backwardation, where a premium is paid for sooner delivery over longer-dated contracts."

However, as has been the case since November, U.S. president Donald Trump continued to be the overshadowing impetus for crude trading, and Ashley Kelty, an analyst at Panmure Liberum, noted that "Near-term prices [are] set to remain volatile due to the uncertainty over the final scale of U.S. tariffs and the resultant impact on global growth."

In other oil- and Trump-related news on Thursday, Hardeep Singh Puri, petroleum and natural gas minister for India, told media his country is not concerned about Trump's threat to impose secondary sanctions on buyers of Russian crude if no peace deal with Ukraine is reached in 50 days.

He said, "I'm not worried at all; if something happens, we'll deal with it…there is a lot of oil available in the market [and] many countries, including Brazil, Canada and others, are ramping up output," and he added, "We have diversified our sources."