WTI crude oil trade held its recent advance to above $80 on Thursday, underpinned by supply-side uncertainties and hopes for a demand recovery in top crude importer China.
Official data showed that US crude oil inventories slumped by nearly 13 million barrels in the week trade ended Nov. 25, falling the most since June 2019 and compared with market expectations for a much smaller 2.758 million barrel decrease. Investors also cautiously awaited an OPEC+ meeting on Dec. 4 amid recent speculations of more production cuts, though there is little likelihood of a policy change,
Reuters reported citing a source with direct knowledge of the matter. On the demand side, a top Chinese official in charge of strict Covid lockdowns signaled a softening stance in the fight against the virus, sparking hopes for stronger energy demand ahead from China.
While Gasoline futures increased to above $2.4 per gallon, up from an over eight-week low of $2.3 reached on November 28, and tracking gains in other energy markets as investors continued to weight demand-supply balances.
OPEC+ has been cutting production to shore up crude prices, and there has yet to be a consensus among the world’s top producers if another cut is worth it at their next meeting in December.
Still, gasoline prices are more than 40% below their June peak of $4.1 due to softer demand and rising domestic output. The latest EIA data showed that the US stockpiles increased by 2769 thousand barrels last week, the third straight week of gains.
Meanwhile, US companies rose output by 4-5% from last year, and the Energy Department projects a similar rate of increase in 2023.