Brent crude trades above $87, sets highest levels since April

Brent crude futures were up 21 cents, or 0.2 percent, at $87.55 a barrel by 1815 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 28 cents at $84.15 in light trade on the U.S. Independence Day holiday.

In the previous session, Brent gained 1.3% to settle at $87.34 for its highest close since April 30. WTI, meanwhile, hit an 11-week high of $83.88.

Those gains followed a bigger-than-expected drop in U.S. crude inventories. The US Energy Information Administration (EIA) reported a drawdown of 12.2 million stocks. Analysts polled by Reuters were expecting an extraction of 680,000 barrels. (EIA/S)

Traders were also watching the war in Gaza and elections in France and the United Kingdom, RBN Energy analyst Martin King said.

“Trade is quiet and people are watching the physical market and the geopolitical situation,” King said.

Oil prices had previously fallen as much as 83 cents, but the decline was not expected to last given the weakness of the dollar and a better outlook for US fuel demand after the EIA data, PVM analyst Tamas Varga said.

However, German industrial orders unexpectedly fell in May, adding to signs that a recovery for Europe’s biggest economy remains elusive.

Concerns about demand were heightened by US data on Wednesday showing that first-time claims for US jobless benefits rose last week, while the number of unemployed also rose.

Conversely, weaker economic data could hasten interest rate cuts by the US Federal Reserve, analysts said, which could support oil markets.

On Thursday, Reuters reported that Russian oil producers Rosneft and Lukoil will sharply reduce oil exports from the Black Sea port of Novorossiisk in July, according to two sources familiar with the loading plan.

Meanwhile, Saudi Arabia’s Saudi Aramco cut the price of the light Arab crude it will sell to Asia in August to $1.80 a barrel above the Oman/Dubai average.

The potential price cut for Asia, which accounts for about 80 percent of Saudi Arabia’s oil exports, underscores the pressure facing OPEC producers as non-OPEC supply continues to rise while the global economy faces headwinds.

Swiss bank UBS expects Brent crude to reach $90 a barrel this quarter, it said in a note to clients, citing OPEC+ production cuts and projected declines in oil inventories.

(Reporting by Nia Williams in British Columbia, Robert Harvey and Paul Carsten in London, Arunima Kumar in Bengaluru, Katya Golubkova in Tokyo and Trixie Yap in Singapore Editing by David Goodman, Emelia Sithole-Matarise and Matthew Lewis)

Disclaimer: This report is automatically generated by the Reuters news service. ThePrint assumes no responsibility for its content.

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