Oil prices for both Brent and West Texas Intermediate (WTI) crude reached new highs on Thursday, with Brent holding above $87 a barrel, its highest level since April.
Brent crude oil, against which Nigerian oil is priced, rose by 21 cents, or 0.2% to $87.55 a barrel, while U.S. WTI crude oil increased by 18 cents to $84.06 a barrel.
According to the U.S. Energy Information Administration (EIA), crude oil inventories declined by 12.2 million barrels, more than the 680,000 barrels decline predicted by analysts polled by Reuters.
The significant reduction in U.S. crude stocks has bolstered market confidence in continued robust demand.
“Trade is quiet and people are watching the physical market and geopolitical situation,” said Martin King, an analyst at RBN Energy, noting that traders are also keeping an eye on the ongoing conflict in Gaza and the upcoming elections in France and the United Kingdom.
Initially, oil prices had dipped by as much as 83 cents, but the downturn was short-lived.
The weaker U.S. dollar and the optimistic outlook for U.S. fuel demand, spurred by the EIA data, supported the market, according to PVM analyst Tamas Varga.
However, concerns about global demand persist. German industrial orders fell unexpectedly in May, adding to worries about Europe’s largest economy’s recovery.
In the U.S., first-time applications for unemployment benefits increased last week, with overall jobless numbers also rising.
While these factors raise demand concerns, some analysts believe that weaker economic data could prompt the U.S. Federal Reserve to cut interest rates, which might be beneficial for oil markets.
In related news, Russia’s major oil producers, Rosneft and Lukoil, are set to significantly reduce oil exports from the Black Sea port of Novorossiisk in July, as reported by Reuters.
Meanwhile, Saudi Aramco has lowered the price for its flagship Arab Light crude for August sales to Asia by $1.80 a barrel above the Oman/Dubai average.
This price cut highlights the pressure OPEC producers face from growing non-OPEC supply and global economic headwinds.
Despite these challenges, Swiss bank UBS remains optimistic, forecasting that Brent crude will reach $90 a barrel this quarter, driven by OPEC+ production cuts and anticipated declines in oil inventories.
As the global oil market navigates these complexities, the recent spike in Brent and WTI prices underscores the volatile interplay of supply, demand, and geopolitical factors influencing the industry.