Brent Crude Surpasses $87, Reaches Highest Levels Since April

By Nia Williams

Oil prices reached their highest levels since April on Thursday, remaining above $87 following data that indicated a decline in U.S. inventories.

Brent crude futures rose by 21 cents, or 0.2%, to $87.55 a barrel as of 1922 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures increased by 18 cents to $84.06, in a market with reduced trading activity due to the U.S. Independence Day holiday.

In the prior session, Brent had gained 1.3%, concluding at $87.34, marking its highest close since April 30, while WTI reached an 11-week high of $83.88.

These increases followed a more substantial than anticipated draw in oil stocks. The U.S. Energy Information Administration (EIA) reported a decrease of 12.2 million barrels in inventories, significantly exceeding analysts’ expectations of a reduction of 680,000 barrels.

Traders are also observing developments related to the ongoing conflict in Gaza and political events in France and the United Kingdom, according to RBN Energy analyst Martin King. He noted that the market is quiet, with participants focusing on both the physical oil market and geopolitical factors.

Earlier, oil prices dipped by as much as 83 cents; however, this decline was not expected to persist due to a weakening dollar and an improved outlook for U.S. fuel demand following the EIA report, as noted by PVM analyst Tamas Varga.

On a less favorable note, Germany’s industrial orders fell unexpectedly in May, suggesting that a robust recovery for the largest economy in Europe remains elusive. Additionally, U.S. economic data revealed an increase in first-time applications for unemployment benefits last week, alongside rising jobless figures, which raised concerns about demand.

Conversely, weaker economic indicators could prompt the U.S. Federal Reserve to consider interest rate cuts, a move that analysts believe could benefit oil markets.

Recent reports also indicated that Russian oil producers, including Rosneft and Lukoil, plan to significantly reduce oil exports from the Black Sea port of Novorossiisk in July, according to two sources familiar with the loading plan.

Meanwhile, Saudi Arabia’s state oil company, Saudi Aramco, announced a reduction in the price of its flagship Arab light crude for August sales to Asia, setting it at $1.80 per barrel above the Oman/Dubai average. This price adjustment, affecting about 80% of Saudi’s oil exports, highlights the pressures OPEC producers face as non-OPEC supply continues to increase amidst global economic challenges.

A recent note from Swiss bank UBS projected that Brent crude could reach $90 a barrel this quarter, citing OPEC+ production cuts alongside anticipated declines in oil inventories.