Brent climbs on demand growth optimism
The front-month ICE Brent contract has gained by $0.57/bbl on the day, to trade at $69.07/bbl at 09.00 GMT.
IMAGE: Oil storage tanks. Getty Images
Upward pressure:
Brent’s price has moved higher on the back of demand-side optimism.
Commercial US crude oil inventories have declined by 3.2 million bbls to touch 419 million bbls for the week ending 18 July, according to data from the US Energy Information Administration (EIA).
A drop in US crude stocks typically indicates higher demand and can lend some support to Brent's price.
“US EIA report showing a weekly slump of 3.2 million barrels in crude inventories helped erase earlier intraday losses,” VANDA Insights’ noted Vandana Hari.
Besides, oil gained amid optimism over the ongoing US-EU trade talks that could boost oil demand growth.
“News emerged that the two sides were working towards a deal that would set a 15% tariff for most goods,” ANZ Bank’s senior commodity strategist Daniel Hynes noted.
Downward pressure:
Rising output from the OPEC+ coalition has fuelled concerns of an impending oil surplus later this year, analysts say, pressuring market sentiment. This news has put downward pressure on Brent crude’s price in the recent days.
The Saudi Arabia-led alliance’s crude production averaged 41.56 million b/d last month, marking an increase of 349,000 b/d from May.
Meanwhile, eight members of the group have agreed to collectively increase their supply by 548,000 b/d in August, accelerating the group’s plan to boost crude production.
The planned production increase next month is four times higher than their original plan to unwind output cuts by 137,000 b/d each month between April 2025 and September 2026.
By Aparupa Mazumder
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