Oil extends gains over cautious trading on lower US crude stocks; Brent near $80/bbl

September Brent futures climbed 29 cents, or 0.4 per cent, to $79.75 a barrel while August U.S. West Texas Intermediate (WTI) crude gained 25 cents, or 0.3 per cent, to $75.60 a barrel. The August WTI contract expires on Thursday. The more active September WTI crude was 35 cents, or 0.5 per cent, higher at $75.64. Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a August 21 expiry, were last trading lower by 0.05 per cent at ₹6,203 per bbl, having swung between ₹6,126 and ₹6,254  per bbl during the session so far, compared to their previous close of ₹6,206 per bbl.

Prices fell in the previous session after data showed U.S. inventories fell less than analysts expected.

“Yesterday’s U.S. EIA (Energy Information Administration) oil stock report proved something of a disappointment for those that were looking for inspiration,” PVM Oil analysts said.

China’s economic recovery following its end to COVID-19 curbs has fallen short of expectations. Its oil imports year-on-year surged by nearly half in June, but at the same time stock levels rose to near an all-time high. Traders said China had been pragmatically buying discounted Russian crude.

The Organization of the Petroleum Exporting Countries and the International Energy Agency have said China’s demand is expected to continue to rise in the second half of this year and remain the main driver of global growth.

China’s imports of crude oil from Russia hit an all-time high in June, Chinese government data showed on Thursday, even as discounts against international benchmarks narrowed.

Crude prices may struggle to find a clear direction given a mixed global demand outlook in the next few weeks, Citi analysts said in a note.

Demand is “a mixed picture with stronger gasoline and jet fuel demand, but weaker petchems and diesel,” the analysts said.

Brent crude prices have broken through to a higher range this month, after being stuck at $72-$78 in May and June, the Citi analysts added, after Saudi output cuts and geopolitical risks supported demand.

Updated: 20 Jul 2023, 09:54 PM IST