Oil rose amid a weaker dollar, while traders pointed to the highest US refinery output since 2019 as a harbinger of strong summer demand ahead.
West Texas Intermediate settled above $72 a barrel on Wednesday after a government report showed refineries increased their crude processing to the highest level since August 2019. Rising gasoline inventories of the U.S. was likely a result of increased refinery output to prepare for summer demand, Rob said. Thummel, portfolio manager at Tortoise Capital Advisors.
“Demand for refined products is quite strong and it’s just getting started,” Thummel said. The report said “you’re going to need a lot more US crude and I think that’s a positive sign for prices.” Motor fuel inventories remain at seasonally low levels for the summer driving season.
Strong Chinese crude imports in May and the recently announced supply cut by Saudi Arabia in July also supported oil prices.
Oil has lost about 10% this year amid concerns about China’s recovery and a rapid interest rate hike by the US Federal Reserve. Russian crude flows also remain high, even after the nation said it would cut output. China’s crude imports topped 12 million barrels a day in May, part of a broader set of strong commodity data. That said, its trade exports fell more than expected, adding to growth concerns.
The outlook for the Chinese economy is key for oil markets, according to International Energy Agency Executive Director Fatih Birol.
“There are a lot of uncertainties, as usual, regarding the oil market, and if I had to choose the most important one is China,” Birol said in an interview with Bloomberg TV this Wednesday. “Of the more than 2 million barrels per day of growth we expect this year in global oil demand, 60% is expected to come from China.”
Prices:
- WTI for July delivery rose 79 cents to settle at $72.53 a barrel in New York.
- Brent for August settlement gained 66 cents to settle at $76.95 a barrel.
