Background on Key Figures and Context
The recent surge in oil prices can be attributed to increased demand for gasoline during the summer season in the United States, as reported by the International Energy Agency (IEA). This rise occurred amidst a decrease in crude oil and fuel inventories, driven by heightened refinery activity and demand.
Oil Price Movements
On Thursday, oil prices went up due to the decline in US crude oil inventories. This was a result of growing summer demand, while concerns about supply risks in the Middle East lessened. These factors countered some of the gains.
- Brent Futures: Increased by 0.07% to $67.73 per barrel.
- West Texas Intermediate (WTI): Rose by 0.49% to $65.24 per barrel.
Both benchmarks had recovered nearly 1% on Wednesday, bouncing back from earlier losses following data showing robust US demand.
Brent futures have traded below $69.36, the price on June 12—the day before Israel initiated airstrikes against Iran.
The Mexican oil export blend decreased by 0.15% to $61.15 per barrel.
US Driving Season and Demand
Although the US driving season started slowly, it is now boosting demand, according to analysts from ANZ.
“The market is starting to process the fact that crude inventories are suddenly quite tight,” said Phil Flynn, an analyst at Price Futures Group.
Inventory Data and Dollar Index
The US Energy Information Administration (EIA) reported on Wednesday that crude and fuel inventories fell in the week ending June 20 due to increased refining activity and demand.
- Crude inventories dropped by 5.8 million barrels, surpassing Reuters survey analyst expectations for a reduction of 797,000 barrels.
Further supporting oil prices, the US dollar index—which measures the greenback against a basket of currencies—plummeted to a three-year low. This was fueled by reports suggesting that President Donald Trump planned to choose the next Federal Reserve chair, prompting fresh bets on US rate cuts.
A weaker dollar makes oil cheaper for holders of other currencies, thereby increasing demand. However, signals of diminishing supply risks in the Middle East offset some of these gains.
Geopolitical Developments
Israeli Prime Minister Benjamin Netanyahu stated that the outcome of Israel’s war with Iran presented opportunities for peace that his country should not miss. President Trump praised the swift end to the conflict between Iran and Israel, indicating that Washington would likely seek a deal with Tehran to curb its nuclear ambitions in upcoming talks with Iranian officials.
