Oil headed for a second weekly gain after rallying to the highest level since October 2018 earlier in the week, with U.S. crude stockpiles falling more than expected in another bullish sign for the market.
Futures in New York traded near $69 a barrel after settling little changed on Thursday. U.S. inventories slid by 5.08 million barrels last week, double the forecast decline in a Bloomberg survey. Saudi Arabia, meanwhile, increased oil prices for customers in Asia by more than anticipated for July after OPEC+ predicted earlier this week that the market was rapidly tightening.
Oil is up more than 40% this year as the U.S., China and Europe lead a robust recovery from the pandemic, despite a Covid-19 comeback in parts of Asia. There have been a raft of bullish calls on the demand outlook recently from OPEC+ to the International Energy Agency, while the prospect of a speedy return of Iranian barrels waned with talks on a nuclear deal dragging on.
OPEC+ may need to keep adding barrels to the market in August or September to meet the demand recovery, according to Gazprom (MCX:GAZP) Neft PJSC Chief Executive Officer Alexander Dyukov. The alliance this week ratified a output boost for July, but didn’t give any hints on future supply moves.
The prompt timespread for Brent was 42 cents in backwardation — a bullish structure where near-dated contracts are more expensive than later-dated ones — on Thursday. That compares with 9 cents at the start of last week.
U.S. gasoline stockpiles rose by about 1.5 million barrels last week, the Energy Information Administration said Thursday, compared with a forecast for a decline. Distillate inventories — a category that includes diesel — climbed for the first time since early April.