Oil prices remained stable near a two-month high, as conflicting market signals emerged, with weaker demand in Asia balancing out a significant drop in US crude stockpiles. West Texas Intermediate (WTI) rose slightly, exceeding $84 a barrel after hitting its highest closing price since mid-April. Brent crude also saw a minor increase on Thursday.
The market found support from a substantial decrease in US crude inventories, which fell by over 12 million barrels last week, marking the largest decline in nearly a year. In other supply-related news, Rosneft and Lukoil are set to reduce oil exports from the Black Sea port of Novorossiisk in July as they resume refinery operations, according to Reuters.
However, the upward momentum was capped by Saudi Aramco's decision to lower the price of its flagship Arab Light crude by 60 cents per barrel, bringing it to $1.80 above the regional benchmark for August shipments. A survey revealed that traders and refiners had expected a larger price cut of 90 cents per barrel.
The potential impact of Hurricane Beryl on Gulf of Mexico oil and gas production has lessened, with the storm sparing major drilling areas and platforms in US federal waters. Data from the hurricane center and the Bureau of Ocean Energy Management indicated that significant platforms such as Exxon Mobil’s Hoover, Occidental Petroleum’s Boomvang, and Shell’s Perdido are now out of the storm's path.
Crude prices have climbed more than 14% from their recent lows in early June, bolstered by OPEC+ supply constraints, anticipated higher summer demand, geopolitical tensions, and bullish trends in equity markets. Nonetheless, concerns over demand in China, the world's largest crude importer, have limited gains due to subdued purchasing activity.
"Geopolitics and weather are keeping oil prices well-supported in the $80s for now," noted Citigroup analysts, including Eric Lee. "There are reasons to believe that current strength can ease, based on physical market and demand signals, even though hurricanes need to be carefully watched."
