Title: Oil prices advance on low oil inventories expectation

Jun 08, 2022 03:03AM ET

By: AnalysisWatch

Oil prices rose Wednesday in anticipation of a report on low U.S. crude oil inventories, while expectations of strong demand for the upcoming auto season also provided support.

At 02:49 a.m. ET, Brent crude futures for August crude were 40 cents, or 0.3 percent, higher at $120.97 a barrel after closing at their highest level since May 31 on Tuesday.

U.S. West Texas Intermediate crude for July was $120.01 a barrel, up 60 cents, or 0.5%, after hitting its highest level since March 8 in the previous session.

Analysts polled by Reuters had expected last week's data to show a further decline in U.S. crude stocks, although gasoline and distillate stocks may rise slightly.

However, data from the American Petroleum Institute showed that U.S. crude and refined product inventories rose last week.

The U.S. Energy Information Administration (EIA) will report last week's inventory levels Wednesday at 10:30 a.m. EDT.

The World Bank on Tuesday cut its 2022 global growth forecast by nearly a third and warned that Russia's invasion of Ukraine has deepened the damage caused by the COVID-19 pandemic and that many countries are now at risk of recession.

Meanwhile, global supplies of crude oil and refined products remain tight, pushing Asian refiners' margins to record levels as Western sanctions hamper exports from key producer Russia.

The chief executive of global commodity trader Trafigura said oil prices could soon reach $150 a barrel this year and even rise even higher as demand is likely to fall by the end of the year.

Most refineries around the world are already running at full capacity to meet rising demand as the pandemic recovers and replace lost Russian supplies.

JP Morgan analysts estimate that Russia has cut exports of refined products by 500,000 to 700,000 barrels a day as it struggles to market the fuel rather than crude.