By Florence Tan
SINGAPORE (Reuters) – Oil prices extended their gains on Thursday, supported by robust demand in the United States, the world’s largest consumer, while demand is expected to rebound in China as COVID-19 restrictions in major cities are eased .
Brent crude futures for August rose 50 cents, or 0.4%, to $124.08 a barrel at 0153 GMT, while U.S. West Texas Intermediate crude for July was at $122.49 a barrel , up 38 cents, or 0.3%.
Both indexes closed Wednesday at their highest level since March 8, matching levels seen in 2008.
The United States saw a record drop in strategic crude reserves even as commercial inventories rose last week, data from the Energy Information Administration (EIA) showed on Wednesday.
Gasoline inventories in the United States fell unexpectedly, indicating resilience in fuel demand during the summer peak despite exorbitant pump prices.
“It’s hard to see a significant decline in the coming months as the gasoline market is only likely to tighten further as we approach the driving season,” said Warren Patterson, head of fuels research. raw materials at ING.
EIA data showed that apparent demand for all petroleum products in the United States reached 19.5 million barrels per day (bpd) while gasoline demand reached 8.98 million bpd, ANZ analysts said in a note.
Investors will be watching May trade data from China, due later Thursday, for indices of demand in the world’s second-largest consumer of oil. Shanghai, the country’s biggest business hub, emerged on June 1 from a two-month lockdown.
“China’s reopening continued to drive demand optimism,” CMC Markets analyst Tina Teng said in a note.
“The price of oil could head towards the March high above $130 in a very tight supply market.”
Efforts by OPEC+ oil producers to increase production are “not encouraging”, UAE Energy Minister Suhail al-Mazrouei said on Wednesday, noting that the group was currently at 2.6 million bpd below its target.
Last week, the group agreed to accelerate the increase in production to control runaway fuel prices and slow inflation. But the move will leave producers with very little spare capacity and almost no wiggle room to compensate for a major supply outage.
(Reporting by Florence Tan; Editing by Shri Navaratnam)
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