On Thursday, crude oil prices went up, reducing the cost gap with the Brent global benchmark as a response to supply cuts.
West Texas Intermediate crude oil futures for August delivery rose by 0.29% to $72.00 per barrel. Likewise, Brent contracts for September exports increased by 0.13% to $76.75 a barrel on July 06’s Asian afternoon session.
The price movement resulted from the supply reduction announced by Saudi Arabia and Russia.
However, there was no conclusion from the WTI since there was a holiday in the US. As a result, it caught up with Brent’s gains from the past day. In Wednesday’s session, the two benchmarks reach their highest level in almost two weeks.
According to the world’s top crude oil exporter, Saudi Arabia, it would lengthen its voluntary output cut to August. The decrease equates to one million barrels per day (bpd). Also, Russia and Algeria’s supply and export levels would go down by 500,000 bpd and 20,000 bpd, respectively.
Moreover, voluntary cuts in July extended until August would significantly tighten markets. Analysts say investors will remain on the sidelines until volumes display many draws.
In addition, US crude oil stocks dropped to 4.40 million barrels last week. On the other hand, gasoline and distillate outputs increased based on market sources.
WTI Rallied from Tight Crude Oil Inventories
On Wednesday, the American Petroleum Institute (API) reported that US oil inventories will fall. This week, it would drop to 4.38 million barrels after the 2.41 million drop last week.
Furthermore, the International Energy Agency expects a supply deficit in the year’s half. Also, analysts are anticipating a 1.80-million-barrel draw from crude storage.
This year, the total number of barrels of oil gained is almost 32 million barrels. However, the net draw since April for inventories is over 15 million barrels.
In addition, the Department of Energy stated that it sold an additional 1.40 million barrels of crude. It is the 14th week of drop in the stockpile, hitting a 40-year low of 347.20 million barrels.
