International crude oil prices for the Brent crude benchmark hit their highest level since April 2024 on Thursday, July 4, holding above the $87/barrel-mark after industry data showed a decline in US inventories. The surge in crude prices followed a larger-than-expected decline in US crude stocks after the US Energy Information Administration (EIA) reported a 12.2 million draw in inventories.
Brent crude futures were last up 13 cents, or 0.2 per cent, at $87.47 per barrel. US West Texas Intermediate (WTI) crude futures were last up three cents at $83.91 in trade thinned by the US Independence Day holiday. In the previous session, Brent gained 1.3 per cent to settle at $87.34 for its highest close since April 30. WTI, meanwhile, had settled at an 11-week high of $83.88.
What’s pushing crude oil prices?
-Analysts said that oil prices had earlier dropped by as much as 83 cents, but the dip was expected not to last given dollar weakness and a brighter outlook for US fuel demand after the EIA data. German industrial orders fell unexpectedly in May, fueling worries that a recovery for Europe’s largest economy remains elusive.
-Demand concerns were heightened by US data on Wednesday showing that first-time applications for US unemployment benefits increased last week while jobless numbers also rose. Countering that, weaker economic data could hasten the US Federal Reserve’s interest rate cuts, which could be supportive for oil markets.
-Softer US data has prompted markets to raise the probability of a September rate cut to 74 per cent from 65 per cent. Russia’s oil producers Rosneft and Lukoil will sharply cut oil exports from the Black Sea port of Novorossiisk in July, according to Reuters. Also, Saudi Arabia’s Saudi Aramco cut the price for the flagship Arab light crude it will sell to Asia in August to $1.80 per barrel above the Oman/Dubai average.
-The potential price reduction for Asia, which accounts for about 80 per cent of Saudi’s oil exports, underscores the pressure faced by the Organisation of Petroleum Countries (OPEC) as non-OPEC supply continues to grow while the global economy faces headwinds. Swiss bank UBS expects Brent crude to reach $90 per barrel this quarter, citing OPEC production cuts and projected declines in oil inventories.