SINGAPORE- Oil prices inched up during Asian trade on Wednesday despite a surprise jump in US stockpiles, driven by geopolitical risks from the Middle East conflict and forecasts of an eventual inventory drawdown during the third quarter peak demand season.
Brent crude oil futures rose 40 cents, or 0.5 percent , to $85.41 a barrel. US West Texas Intermediate crude futures gained 43 cents, or 0.5 percent , to $81.26 per barrel.
“It seems the market is shrugging off demand concerns for now, anticipating inventory drawdowns in peak third quarter demand season. Official Energy Information Administration (EIA) inventory numbers today will provide the market further pointers on the trend,” said Suvro Sarkar, energy sector team lead at DBS Bank.
The American Petroleum Institute (API) reported US crude oil stocks rose by 914,000 barrels in the week ended June 21, according to market sources briefed on the data. Analysts polled by Reuters expect crude stocks to have declined by nearly 3 million barrels last week.
Despite the near term pressure of a stronger dollar and bearish US crude oil stocks data, the market is likely to find support on the back of continued OPEC+ cuts and stronger seasonal demand during the third quarter, said Warren Patterson, head of commodities strategy at ING.
“Our balance suggests the (global) market will be in a roughly 1.5 million barrels per day deficit in the third quarter due to continued OPEC+ cuts and stronger seasonal demand usually seen in the third quarter. We are already seeing signs of tightening with a stronger North Sea physical market.”
