Brent gains on signs of strong demand growth

The front-month ICE Brent contract has gained by $0.62/bbl on the day, to trade at $67.57/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

Brent’s price has shed the previous day’s losses after the US Energy Information Administration (EIA) reported a drawdown in US crude stocks.

Commercial US crude oil inventories have dropped by 2.4 million bbls to touch 418 million bbls for the week ending 22 August, according to data from the EIA.

A drop in US crude stocks typically indicates higher demand and can lend some support to Brent's price.

“[Brent] crude futures found support… from the Energy Information Administration report, which showed sizeable inventory declines across crude and refined products,” remarked VANDA Insights’ founder Vandana Hari.

Downward pressure:

Brent’s price gains were capped after US tariffs on imports of Indian goods came into effect yesterday.

US President Donald Trump has imposed 25% secondary tariffs against India, taking the total levy on US imports from India to 50%.

New Delhi currently faces tariffs on all exports to the US because of its continued purchases of Russian crude oil, according to market analysts.

“US tariffs on imports of Indian goods rose to 50% on Wednesday to punish the exporter for buying Russian crude,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

By Aparupa Mazumder

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