Oil prices retreat from 2-mth highs; demand hopes, supply risks persist
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Investing.com-- Oil prices fell from two-month highs in Asian trade on Thursday, as traders collected some profits from a strong run-up this week, while soft U.S. economic data raised some concerns over long-term demand.
But prices were still relatively buoyant after a substantially bigger-than-expected drawdown in U.S. inventories, while persistent conflict in the Middle East also kept a risk premium in play.
Brent oil futures expiring in September fell 0.3% to $87.05 a barrel, while West Texas Intermediate crude futures fell 0.3% to $82.76 a barrel by 20:32 ET (00:32 GMT).
Weakness in crude came following some weak labor market and purchasing managers index indicators, which signaled some cooling in the U.S. economy.
PMI data from top importer China also underwhelmed on Wednesday.
Still, losses in crude were limited as the dollar also tumbled after Wednesday’s readings, as traders increased bets on an interest rate cut in the coming months.
US inventories see massive drawdown; summer demand picks up
Official inventory data showed on Wednesday that U.S. oil stockpiles fell 12.157 million barrels (mb) in the week to June 28, much more than expectations for a draw of 0.4 mb.
Outsized draws in gasoline and distillates stockpiles also showed that demand was picking up with the summer season.
A record number of Americans are forecast to travel by road this week, on account of the Independence Day holiday on Thursday.
Optimism over increased demand in the world’s biggest fuel consumer, especially during the travel-heavy summer season, had been a key point of support for oil prices in recent weeks.
Middle East tensions, supply risks persist
Persistent concerns over geopolitical disruptions in the Middle East, especially as tensions between Israel and Lebanon’s Hezbollah showed little signs of deescalating.
Potential disruptions in production in the Gulf of Mexico also factored into oil prices, as Hurricane Beryl made landfall in Jamaica and was set to make its way up along the east coast.
But the U.S. National Hurricane Center said the hurricane was likely to weaken to a tropical storm by the time it reached the gulf, which is a key region for oil production in North America.
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