Last week saw gains for both U.S. West Texas Intermediate and benchmark Brent crude oil, with Brent futures notably outperforming WTI due to robust Asian demand.
WTI oil had been rising steadily for a week until a government study on Wednesday revealed that, in the midst of the busiest driving season of the year, American gasoline consumption had fallen by about 8%. Traders attributed the unexpected dip to record gas prices at the pump.
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September WTI crude oil ended the week at $94.70, an increase of $0.13 or 0.14 percent, while September Brent crude oil ended the week at $103.20, an increase of $2.04 or 2.02 percent. The United States Oil Fund ETF (USO), which closed at $74.53, increased by $0.79 or 1.07 percent.
According to a report released on Wednesday by the U.S. Energy Information Administration (EIA), the week ending July 15 saw a larger-than-anticipated increase in gasoline stocks due to weaker demand.
The EIA reports that demand for gasoline is still down, and that during the past four weeks, supply was 8.7 million bpd, or roughly 7.6 percent less than it was at the same time last year. Given that the summer driving season is already in full swing in the United States, this news was unexpected.
Additionally, compared to estimates for a 71,000-barrel increase, U.S. gasoline stockpiles increased by 3.5 million barrels in a single week to reach 228.4 million barrels.
Prices were also restrained last week following reports of increased Libyan production and after the European Union announced it would permit Russian state-owned enterprises to export oil to other countries in accordance with a modification of sanctions approved by member states the previous week.
After removing the force majeure on oil exports last week, Libya’s National Oil Corp (NOC) reported on Wednesday that crude production has resumed at numerous oilfields.
The state-owned NOC announced in a statement that production has resumed at Waha Oil Company fields at a rate of 70,000 barrels per day (bpd) and would be gradually raised until normal rates are restored.
In an effort to reduce the threats to the security of the world’s energy supply, Russian state-owned businesses Rosneft and Gasprom will now be authorized to transfer oil to other nations.
Because of concerns that aggressive interest rate increases by the US Federal Reserve and other strong central banks will reduce global fuel demand, the market’s mood is expected to remain gloomy this week. At its meeting on July 26–27, the U.S. Federal Reserve is expected to likely increase interest rates by 75 basis points.