Oil Prices Soar, Keep Growing For 2 Days In A Row

Illustration. (Photo: Doc. Antara)

JAKARTA - Oil prices soared late Wednesday (Thursday, July 22, western Indonesia time), extending gains for a second straight day, despite data showing an unexpected rise in US crude inventories.

The price of West Texas Intermediate (WTI) crude futures for September delivery added 3.10 dollars, or 4.6 percent, to settle at 70.30 dollars per barrel on the New York Mercantile Exchange.

Meanwhile, Brent crude futures for September delivery rose 2.88 dollars, or nearly 4.2 percent, to close at 72.23 dollars per barrel on the London ICE Futures Exchange.

US crude inventories increased by 2.1 million barrels during the week ended July 16, the US Energy Information Administration (EIA) said in a report on Wednesday, July 21. Analysts polled by S&P Global Platts expect the EIA publication to show a 6.7 million barrel drop in US crude supplies.

The EIA report also showed crude stockpiles at Cushing, Oklahoma, a major US oil shipping hub, fell by 1.4 million barrels in the past week.

On the other hand, total gasoline inventories decreased by 0.1 million barrels last week and refined fuel inventories fell 1.3 percent, according to the EIA.

Market participants continue to digest the agreement of major oil producers on production. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on Sunday 18 July to increase supply by 400,000 barrels per day from August to December.

Oil was hit by a sell-off on Monday, July 19, driven by fears of a demand meltdown amid rising COVID-19 cases, pushing oil around 7.0 percent lower and hitting other risk assets. The market is skeptical that the price increase will last long.

"It's hard to see prices rebounding unless virus jitters are brought back under control. The market is clearly nervous about the demand outlook," said Stephen Brennock of oil broker PVM.