On Wednesday, crude oil prices increased as Saudi Arabia planned significant output cuts to offset demand distress from high US fuel stocks.
West Texas Intermediate crude oil futures for July delivery rose by 0.34% to $72.78 per barrel on June 08. Likewise, Brent oil contracts for August exports went up by 0.29% to $77.17 a barrel.
The two benchmarks climbed more than $1.00 million after Saudi Arabia decided to decrease outputs. It equates to one million barrels per day to nine million barrels per day in July.
According to experts, futures seem to be in conflict due to slow demand for manufacturing and weak diesel demand. It is facing a projected production slash from OPEC and Saudi.
Based on a statement from the Energy Information Administration, US crude oil stocks slid by 450,000. It is lower than the estimated one million builds.
Moreover, the unexpected build-in fuel storage raised some issues about the consumption by the world’s top fuel consumer. Concerns increased as travel demand went up during the Memorial Day weekend.
Furthermore, the commodity’s price gained support as the dollar weakened while the chances for a Federal Reserve hike faded. Besides, a lower greenback can contribute to demand since oil would be cheaper for foreign buyers.
Dollar Weakness Pulls Up Oil Prices
Oil prices jumped amid the presence of dollar weakness. Traders hinted that the leading refinery runs in the US since 2019 as an indicator of upcoming robust summer demand.
Based on experts, the requests for refined products are strong, and it is just the start. They added that more US crude is needed, a good sign for its prices. Moreover, storage levels for motor fuel could be seasonally low for the summer driving period.
Also, solid Chinese crude imports in May and the recent supply cut announcement from Saudi Arabia supported oil prices. Other analysts said that the outlook for the economy in China is vital for the markets.
