Oil prices drifted higher on Wednesday, anticipating a report of low U.S. oil stocks, while expectations of solid demand in the upcoming driving season also lent support.
Brent crude futures for August had risen 21 cents, or 0.2%, to $120.79 a barrel by 0413 GMT after closing on Tuesday at the highest since May 31, Reuters reported.
U.S. West Texas Intermediate crude for July was at $119.75 a barrel, up 34 cents, or 0.3%, after reaching its highest settlement since March 8 in the previous session.
Analysts polled by Reuters expect data for last week to show another drawdown of U.S. crude inventories, although gasoline and distillates stocks could edge higher.
“The oil market is expected to remain tight as the supply side will continue to tell a story of low inventories. Crude oil inventories will likely post more draws as driving season and vacationing heats up,” OANDA analyst Edward Moya said in a note.
However, figures from the American Petroleum Institute showed that U.S. crude and oil products inventories rose last week.
The U.S. Energy Information Administration (EIA) will report last week’s stock levels at 10:30 a.m. EDT (1430 GMT) on Wednesday.
The World Bank on Tuesday slashed its global growth forecast for 2022 by nearly a third, warning damage from the COVID-19 pandemic, and that many countries now faced recession.
Meanwhile, global crude and oil products supplies remain tight, boosting Asian refiners’ diesel margins to record levels.
The CEO of global commodities trader Trafigura said oil prices could soon hit $150 a barrel and go higher this year, with demand destruction likely by the end of the year.
Most refineries globally are already running close to capacity to meet rising demand from pandemic recovery.
On Tuesday, China topped up its first batch of product export quotas aimed at reducing high domestic inventories, which have risen as pandemic lockdowns have dented demand. Despite the latest additions to the quotas, their volumes remain much lower than last year, however.
“We do not see a meaningful impact to ease the current diesel tightness but will watch for the start-up progress of new refiners like Petronas RAPID and Kuwait Al-Zour,” Citi analyst Oscar Yee said in a note.
