Oil prices rose to their highest level since 2018 after data showed a decline in US crude oil inventories, further evidence that the market is tightening as the economy resumes, while some prominent traders expect oil prices to continue to rise.
West Texas Intermediate rose 0.5 per cent in early Asian trading after rising 1.8 per cent on Tuesday. The American Petroleum Institute reported that U. S. crude oil stocks fell by 8.54 million barrels last week. If confirmed by government data released later on Wednesday, it would be the biggest drop in inventories since January. However, gasoline and distillate stocks increased.
Oil prices are rising again this month. With the help of the COVID-19 vaccine plan, major economies continue to reopen, boosting global energy demand, while OPEC and its allies are cautious about increasing supply. GlencoreAnd Vitol Group executives said this week that they expected oil prices to rise further.
The United States is steadily abolishing epidemic prevention and control measures. California's economy reopened completely on Tuesday, and New York lifted the remaining restrictions. Even if prices rise sharply, US shale oil producers have not increased their output significantly this year.
West Texas Intermediate for July delivery on the New York Mercantile Exchange rose 0.5 per cent to $72.46 a barrel at 07VR 32 Singapore time. Earlier, prices rose to $72.50, the highest level since October 2018. Brent crude for August delivery on ICE Europe rose 1.6 per cent to $73.99 a barrel on Tuesday.
The latest rise in oil prices comes as the Fed is likely to issue a key policy statement later on Wednesday. Although the US central bank is not expected to adjust interest rates, it is likely to have preliminary discussions on when and how to scale back bond purchases. Any adjustment in this area could affect the value of the dollar and demand for commodities such as oil.