Brent maintains its $85 level before US inventory figures

As concerns about supply disruptions arose due to the intensifying crisis in the Middle East, Brent oil futures remained stable on Thursday, trading just below seven-week highs while the market awaited U.S. inventory data for signs of demand.

By 11:45 GMT, August Brent crude had increased by 28 cents, or 0.3%, to $85.35 per barrel.
The July expiration date U.S. West Texas Intermediate (WTI) futures gained 13 cents, or 0.2%, to $81.70.

Due to a public holiday in the United States, there was no WTI settlement on Wednesday, which mainly kept trading quiet. At $80.78, the more actively traded August contract was up 7 cents.

According to ActivTrades analyst Ricardo Evangelista, the Middle East’s ongoing turmoil is likely to sustain a growing geopolitical risk premium, which will keep oil prices supported at current levels.

Overnight, Israeli forces bombarded locations in the central Gaza Strip while tanks continued their southward march into Rafah.

For the time being, though, worries about growing geopolitical tension seem to be eclipsed by forecasts of a build-up in inventories, according to Priyanka Sachdeva, senior market analyst at Phillip Nova.

Due to the Juneteenth holiday on Wednesday, investors are waiting for the Energy Information Administration (EIA) to disclose U.S. inventory data later on Thursday. This is a day later than usual.

According to market sources quoting data from the American Petroleum Institute, an industry analysis issued on Tuesday revealed that while gasoline stockpiles decreased, U.S. crude stocks increased by 2.264 million barrels during the week ending June 14.

According to J.P. Morgan commodities analysts, “oil balances should tighten and inventories should begin to draw during the summer months” due to a seasonal increase in demand for oil, refinery runs, continuing weather risks, and continued production restrictions by the OPEC+ producer group.

Refining margins are being supported by a Wednesday increase in fuel prices. On Wednesday, the difference between the ICE gasoil futures and Brent crude soared to a two-month high of $20.63 per barrel.

According to PVM analyst Tamas Varga, stronger fuel refining margins offer a “healthy dose of encouragement for those who have been expecting improvements on the demand side”.

Ahead of Britain’s national election on July 4, investors also processed the Bank of England’s decision to maintain its main interest rate at a 16-year high of 5.25%.

The cost of borrowing goes up with interest rates, which can stifle economic growth and reduce demand for oil.