Crude oil futures rose on Thursday, reclaiming some of the gains lost during the past week, on reports that the US is consuming more of its oil inventories than in the recent past.
August-delivery light sweet crude futures advanced $1.66 or 1.6% to exchange at $102 per barrel on the New York Mercantile Exchange.
The surge in crude prices comes at a time when the US is reported to have more of its backup oil supplies than at any other time in the past six months. JBC Energy said that the massive drain of crude oil stockpiles, which dropped by 7.5 million barrels according to statistics from the Energy Information Administration, was the deepest plunge in six months. The reported loss surpassed the 2.6 million-barrel estimates worked out in a Wall Street Journal survey of analysts and projection of 4.8 million barrels from the American Petroleum Institute.
Brent crude futures for September delivery added 0.71 cents or 0.7% to exchange at $107.88 per barrel on the ICE futures exchange. The surge stems largely from the August contract that expired on Wednesday at a rate of $105.8.
“The crude stockpile draw explains why WTI is up a bit. Russian sanctions do not seem to be worrying the market for now. The bigger picture is the weak crude oil market in Europe,” senior broker Christopher Bellew of London-based Jefferies Bache Ltd told Bloomberg by email.
The EIA said that inventories at Cushing, Oklahoma, the biggest oil-reserve center and delivery point for WTI contracts in the US, dropped by 650,000 barrels to 20.3 million in the week that ended July 11.
Despite new sanctions against Russia by the US and EU, analysts from Nomura Holdings Inc. and Sapient Global Markets believe hikes in crude prices won’t be sustained because there is enough shipment capacity and no shortfall of global inventories.
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