Oil prices up following strong demand data, supply concerns

By Duygu Alhan

Oil prices climbed on Thursday buoyed by robust demand figures from the US Energy Information Administration (EIA) and reduced production levels from the Organization of the Petroleum Exporting Countries (OPEC), amid ongoing concerns over fuel supplies and geopolitical tensions in the Middle East despite cease-fire negotiations in Gaza.

Brent crude, the international benchmark, traded at $85.58 per barrel at 10:41 a.m. local time (0721 GMT), marking a 0.59% increase from its previous session close of $85.08 per barrel. Meanwhile, West Texas Intermediate (WTI), the American benchmark, rose by 0.54% to $82.54 per barrel from $82.10 per barrel previously.

EIA data released late Wednesday revealed a significant decrease of approximately 3.4 million barrels in US commercial crude oil stocks, contrasting with market expectations of a 700,000 barrel increase. Gasoline inventories also fell by around 2 million barrels to 229.7 million barrels, underscoring a positive demand outlook in the world's largest oil consumer.

OPEC's latest monthly report indicated a reduction in crude oil production by 80,000 barrels per day (bpd) in June, bringing total output down to 26.57 million bpd. The broader OPEC+ group, including non-OPEC producers, saw a decline of 125,000 bpd to 40.80 million bpd, further fueling concerns about constrained supply and supporting higher oil prices.

Amidst ongoing conflicts in the Middle East despite ceasefire efforts, geopolitical tensions continue to underpin fears of disrupted supply routes. Yemen's Houthi group reported targeting three ships in the Arabian Sea and Gulf of Aden, including an American and an Israeli vessel, citing violations of access restrictions to an Israeli port, heightening market apprehensions of potential disruptions to oil shipments, contributing to additional upward pressure on prices.