Oil Steadies Near Two-Week High After U.S. Stockpiles Decline

  • Bloomberg
Oil Steadies Near Two-Week High After U.S. Stockpiles Decline
Credit: © Reuters.

(Bloomberg) -- Oil steadied near a two-week high after U.S. crude and fuel stockpiles posted strong declines, signaling peak summer demand remains robust despite a resurgence of Covid-19.

Futures in New York traded above $72 a barrel after climbing 1% on Wednesday. Crude inventories dropped more than expected last week to the lowest level since January 2020, while supplies of distillates -- a category that includes diesel -- slid the most since April, according to a government report.

Oil has whipsawed throughout July and is set for only the second monthly loss since October after the virus comeback coincided with an OPEC+ agreement to boost output from August. The fast-spreading delta variant has led to renewed restrictions in some regions and raised concerns about short-term demand, although there are expectations the market will continue to tighten.

The prompt timespread for Brent was 89 cents a barrel in backwardation -- a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 64 cents a week earlier.

U.S. crude stockpiles shrunk by 4.09 million barrels last week, according to data from the Energy Information Administration, compared with a forecast in a Bloomberg survey for a 2.5-million barrel decline. Gasoline inventories also fell, dropping by 2.25 million barrels.

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