On Wednesday, June 19th, optimistic sentiment for summer demand and concerns about escalating conflicts, as well as the unexpected increase in U.S. stocks that affected investors (related to the rise of the U.S. stock market), caused oil prices to fall after hitting a seven-week high.
The WTI crude oil price rose to $81.96 per barrel during trading, the highest level since April 30th. As of press time, it is now reported at $80.63 per barrel, down 0.10%.
(West Texas Intermediate (WTI) crude oil futures chart, source: FX168)
Brent August crude oil futures fell $0.26 per barrel, down 0.30%, to close at $85.07 per barrel. It reached $85.84 per barrel earlier in the day, its highest level since May 1st. As of press time, it is now reported at $84.49 per barrel, down 0.05%.
(Brent crude oil futures chart, source: FX168)
[Market News Analysis]
Trading was light on Wednesday due to the U.S. holiday.
Tamas Varga of oil broker PVM said, "The current snapshot presents a disappointing picture, but there are signs that the outlook is more optimistic."
Varga added that the Brent crude oil price has risen $8 per barrel since early June, "which indicates that people are really optimistic that global oil balance will eventually tighten."
Both benchmark crude oil prices have rebounded strongly in the past two weeks, rising more than $1 per barrel in the previous trading day, as a result of a drone attack in Ukraine causing a fire at a major Russian oil port.
In the Middle East, Israeli Foreign Minister Israel Katz warned that Israel may have a "full-scale war" with Hezbollah in Lebanon, despite U.S. efforts to avoid larger conflicts between Israel and Iranian-backed groups. An escalation of the war could lead to disruptions in oil-producing areas.
Bart Melek, head of commodity strategy at TD Bank, said, "The tension in the Middle East may escalate, adding some supply risk to the oil demand equation." He added that recent U.S. economic data supported people's bets that the Federal Reserve would cut interest rates in the coming months.
Meanwhile, market sources cited data from the American Petroleum Institute on Tuesday that showed U.S. crude oil inventories increased by 2.264 million barrels for the week ending June 14th. Analysts surveyed by Reuters had previously projected a 2.2 million barrel decline in crude inventories.
However, an unnamed source said that gasoline inventories decreased by 1.077 million barrels, while distillate inventories increased by 0.538 million barrels.
The U.S. Energy Information Administration will release official inventory data on Thursday.
According to sources, some oil wells in Ecuador were closed due to heavy rain affecting oil transportation.