Oil prices advance as Nigerian grades were firmed following a hefty rise in United States fuel stocks ahead of the summer driving season, signalling possible demand slides.
Market data shows that Nigerian differentials were firmed with the return of European demand as restrictions ease, while Angola continued to sell out. Bonny Light was being shown at higher offer levels at around dated Brent plus 70 cents a barrel.
Other grades such as Brass River have also firmed. International benchmark Brent crude was trading at $71.76 per barrel in the morning, down 0.63% after closing Wednesday at $72.22 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $69.56 a barrel at the same time with a 0.57% decrease after ending the previous session at $69.96 per barrel.
However, Brent oil price reached a record high level since May 2019 at $72.85 a barrel during the previous trading session afternoon. Likewise, WTI attained $70.63 a barrel, hitting the highest level since October 2018.
The record high oil prices came following the remarks of US Secretary of State Antony Blinken, who said hundreds of sanctions targeting Iran are likely to remain in place even if Iran and the US return to compliance, including those imposed by the Trump administration.
This signaled to investors that Iranian barrels would not soon be added to the market, relieving oversupply concerns.
However, oil prices came under pressure after the US Energy Information Administration (EIA) announced Wednesday that the country’s gasoline inventories rose by 7 million barrels, or 3%, during the week ending June 4.
The hefty build was mainly caused by less driving activity during the country’s Memorial Day weekend last week. Crude oil inventories, however, decreased by 5.2 million barrels, or 1.1%, during the same period. Oil had slipped in earlier trade as a rise in U.S. fuel stocks cast doubt on demand ahead of the summer driving season.
Crude inventories that exclude the Strategic Petroleum Reserve (SPR) fell by 5.2 million barrels in the week to June 4 to 474 million barrels, the third consecutive weekly drop.
But fuel stocks were up sharply, with the product supplied falling to 17.7 million barrels per day (bpd) versus 19.1 million the week before.
Implied gasoline demand fell to 8.48 million bpd in the week to June 4, down from 9.15 million bpd from the week before, but up from 7.9 million bpd a year ago, EIA data showed.
Weighing on prices, India’s fuel demand slumped in May to its lowest since August last year, with a second COVID-19 wave stalling mobility and muting economic activity in the world’s third largest oil consumer.
Crude Oil Prices Edge Higher as Nigerian Grades Firm