Meanwhile, all eyes are on OPEC and a possible escalation of output: File Image/Pixabay
A massive draw in U.S. crude stockpiles supported the analytical contention of high demand recovery and was the cause on Wednesday for a resumption in rising oil prices.
After the American Petroleum Institute reported crude stocks falling by 7.2 million barrels for the week ended June 18 (much bigger than the 3.9 million barrels predicted in a Reuters poll), West Texas Intermediate jumped 33 cents to $73.18 per barrel by 0217 GMT.
Brent jumped 42 cents to $75.23 per barrel.
John Kilduff, founding partner, Again Capital
We're at lofty levels and priced for bullish perfection
A reduction in the U.S. dollar from a recent two-month high was also said to have supported oil prices.
John Kilduff, founding partner at Again Capital, said, "We're at lofty levels and priced for bullish perfection."
The next big event for the commodity happens on July 1, when the Organization of the Petroleum Exporting Countries (OPEC) and its allies meet to discuss output strategies based on the strength of demand recovery.
ANZ analysts said in a note, "The producer group once again faces some tough decisions as the market continues to show tightness: global progress in COVID-19 vaccination campaigns have seen consumer mobility across U.S., China, and Europe recover sharply."
Prince Abdulaziz, energy minister for Saudi Arabia, said OPEC has a role in "taming and containing" inflationary pressures, but he stressed that the cartel should remain cautious because the oil market hadn't fully escaped the economic "doldrums" created by the pandemic.
For his part, Kilduff remarked, "Chatter about increasing output are going to tear away some of the gains."
But in terms of the oil market's health overall, it continues to defy those who predict its demise due to alternative energy development: Rystad Energy in a note published Wednesday disclosed that the world's publicly traded independent oil producers will make record profits this year, with combined free cash flow from the sector expected to surge to $348 billion, compared to the previous high of $311 billion in 2008.
However, instead of in previous cycles that saw crude rallies prompting companies to spend heavily on exploration, Rystad noted that this cycle sees executives determined to constrain capital spending on new output.