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Oil prices continue to rise on healthy U.S. demand and Chinese optimism

Image: Reuters Berita 24 English -   Oil prices extended increases on Thursday, supported by solid demand in the world's largest consum...

Image: Reuters

Berita 24 English -  Oil prices extended increases on Thursday, supported by solid demand in the world's largest consumer nation, the United States, and by expectations of a resurgence in Chinese demand as COVID-19 restrictions in major cities are removed.

Brent crude futures for August increased 50 cents, or 0.4%, to $124.08 per barrel as of 01:53 GMT, while U.S. West Texas Intermediate crude for July rose 38 cents, or 0.3%, to $122.49 per barrel.

Both indices closed Wednesday at their best levels since March 8, 2008, matching their 2008 levels.

Energy Information Administration (EIA) data released on Wednesday revealed that the United States experienced a record decline in strategic crude reserves while commercial inventories grew last week.

Despite sky-high pump prices, gasoline inventories in the United States unexpectedly decreased, indicating that demand for the motor fuel remained resilient throughout peak summer months.

"It is difficult to foresee much downside in the coming months, given the gasoline market is anticipated to tighten more as the driving season progresses," said Warren Patterson, head of commodities research at ING.

ANZ analysts stated in a note that according to EIA data, apparent demand for all oil products in the United States increased to 19.5 million barrels per day (bpd), while gasoline demand increased to 8.98 million bpd.

In order to gauge oil consumption in the world's second-largest oil consumer, investors will closely examine China's trade data for May, due Thursday evening. Shanghai, the largest business hub in the country, emerged from a two-month lockdown on June 1.

Analyst Tina Teng of CMC Markets said in a note, "China's reopening has continued to raise demand optimism."

On account of an extremely tight supply market, the price of oil could reach a March high of above $130.

Wednesday, UAE energy minister Suhail al-Mazrouei stated that efforts by OPEC+ oil producers to increase output are "not promising," since the organization is presently 2.6 million barrels per day (bpd) short of its aim.

The group decided last week to accelerate production growth in an effort to rein in soaring fuel prices and decrease inflation. The decision, however, will leave producers with essentially no spare capacity and nearly no room to compensate for a significant supply disruption.

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