Oil futures moved higher Thursday, buoyed after data a day earlier showed a fall in U.S. crude and gasoline inventories ahead of the start of summer driving season, while the European Union continues to wrangle over a plan to phase out imports of Russian energy in response to the country’s invasion of Ukraine.
Price action
- West Texas Intermediate crude for July delivery CL00, +0.82% CL.1, +0.82% CLN22, +0.82% rose 82 cents, or 0.7%, to $111.15 a barrel on the New York Mercantile Exchange.
- July Brent BRN00, +0.54% BRNN22, +0.69%, the global benchmark, was up 70 cents, or 0.6%, at $114.73 a barrel on ICE Futures Europe.
- Back on Nymex, June gasoline RBM22, +0.49% rose 0.5% to $3.85 a gallon, while June heating oil HOM22, +0.11% edged up 0.2% to $3.872 a gallon.
- June natural-gas futures NGM22, +1.49% rose 1.8% to $9.13 per million British thermal units.
Market drivers
The Energy Information Administration on Wednesday said U.S. crude inventories fell 1 million barrels last week, as refiners ramped up activity in response to an expected rise in seasonal gasoline demand. Gasoline stocks dropped 500,000 barrels and distillate stocks rose 1.7 million barrels.
Gasoline futures hit all-time highs earlier this month, while U.S. drivers are paying record prices at the pump.
“U.S. drivers are already facing higher prices at the gas pump, and the summer driving season could exacerbate the trends that are already in place. Inventories typically drop through the summer months, and stockpiles of gasoline in the United States are already 8% below seasonal norms,” said Peter McNally, global sector lead for industrials materials and energy at Third Bridge.
Read: Sky-high gas prices aren’t stopping Americans from hitting the road this summer
“Refiners appear to be responding to the tightness in refined product markets,” wrote analysts at ING. “Refinery utilization increased by 1.4 percentage points to 93.2%, the highest operating rate that we have seen from US refiners since late 2019. These stronger refinery runs and slightly weaker implied gasoline demand over the week led to the more marginal decline in gasoline inventories. US gasoline stocks are likely to remain tight as demand picks up over the driving season.”
Meanwhile, demands by Hungary for funds to upgrade its energy infrastructure remain a hurdle to an agreement by the European Union on bans of imports of Russian crude. European leaders have looked to a month-end summit for a potential breakthrough.