However, demand recovery remains strong globally: File Image/Pixabay
After several sessions of gains, crude prices on Wednesday levelled off when it was learned that fuel demand following the U.S. Memorial Day weekend was weaker than expected.
According to Energy Information Administration, product supplied fell to 17.7 million barrels per day (bpd), versus 19.1 million bpd the week before - although some analysts were quick to note that rather than this being Covid related and therefore symptomatic of a bigger problem, poor weather up and down the U.S. East Coast may have reduced consumption.
Regardless, Brent on Wednesday remained unchanged to settle at $72.22 per barrel, and West Texas Intermediate closed 9 cents lower at $69.96 per barrel.
Ahmed Mehdi, Oxford Institute for Energy Studies
Demand this summer will be stronger than last year
Oil's remarkable recovery from the depth of the government-mandated Covid lockdowns remains intact, though, with the EIA forecasting U.S. fuel consumption to grow by 1.48 million bpd this year, up from a previous forecast of 1.39 million bpd.
For the time being, oil seems resistant to tumultuous market change: specifically, media noted that even though Exxon Mobil Corp. and other supermajors are shrinking, fossil fuel demand holds strong and national oil companies will likely fill the void of private companies - and won't be vulnerable to dissident board members.
Demand due to soaring heat is an emerging issue in Saudi Arabia, the United Arab Emirates, and Kuwait, all of whom are experiencing weather that's hotter than normal: Ahmed Mehdi, a Middle East analyst at the Oxford Institute for Energy Studies, said of the region, "Demand this summer will be stronger than last year" as homes and businesses scramble to keep buildings cool.
For the record, the Saudis burned as much as 25 percent more crude in its power plants last year and said that it could use up to 1 million bpd to generate electricity.
Meanwhile, even though pundits think a nuclear deal between the U.S. and Iran is a lot less likely than Iranian officials have publicly stated, the Islamic republic on Wednesday said it's preparing to hike oil production anyway.
Specifically, Iran’s national oil company has reportedly laid out plans to revive oil production in the event that U.S. sanctions are removed, starting with an output hike to 3.3 million bpd within one month of the penalties being lifted.