Light crude oil futures have climbed 2.12% this week, driven by a mix of bullish factors.
Geopolitical tensions in the Middle East, an unexpectedly large draw in U.S. crude inventories, and optimistic forecasts for summer fuel demand have all contributed to pushing prices higher.
As traders assess these developments against the backdrop of OPEC+ supply management and steady U.S. production growth, the oil market remains finely balanced between supply constraints and recovering demand.
U.S. Crude Inventory Draw: A Bullish Surprise
The American Petroleum Institute (API) reported a significant 9.163 million barrel drawdown in U.S. crude inventories for the week ending June 28. This far exceeded analysts’ expectations of a 700,000-barrel draw, providing strong support for oil prices. Larger-than-expected inventory drops typically signal increased demand or reduced supply, potentially driving prices higher. However, the increase in gasoline inventories (up 2.468 million barrels) slightly tempers this bullish signal, suggesting demand may not be uniformly strong across all petroleum products.
Middle East Tensions: Geopolitical Premium Returns
Recent escalations in the Middle East, particularly involving Israel, Gaza, and Lebanon, have reintroduced a geopolitical risk premium to oil prices. The potential for supply disruptions in the oil-rich region and increased uncertainty.