Oil Edges Higher On Tight Supply, Rising U.S. Refining Activity

Brent crude futures for July rose 47 cents to $114.03 a barrel, while U.S. West Texas Intermediate (WTI) crude for July delivery ended up 56 cents at $110.33 a barrel. barrel.

Oil prices rose on Wednesday, supported by tight supplies and as U.S. refiners pushed processing activity to their highest level since before the coronavirus pandemic began.

Brent crude futures for July rose 47 cents to $114.03 a barrel, while U.S. West Texas Intermediate (WTI) crude for July delivery ended up 56 cents at $110.33 a barrel. barrel.

U.S. crude inventories fell by 1 million barrels last week, the government said, with gasoline inventories also falling slightly. Distillate inventories increased by 1.7 million barrels. Refiners accelerated the pace of processing, bringing capacity utilization to 93.2%, its highest level since December 2019.

Refiners have had to operate their facilities at full capacity to cope with strong demand, especially from abroad, as exports of refined products reached more than 6.2 million barrels a day last week. High exports and reduced refining capacity mean that gasoline inventories have fallen in the United States.

Memorial Day travel in the United States this coming weekend is expected to be the busiest in two years, leading to increased demand for fuel as more drivers hit the road and shed restrictions related to the coronavirus pandemic despite high fuel prices.

“We don’t see any elasticity in demand for refined products,” said Gary Cunningham, director of market research at Tradition Energy. “People will still drive; people will still drive.”

Global crude supplies continue to tighten as buyers shun oil from Russia, the world’s second largest exporter, following the invasion of Ukraine, which Moscow calls a “special military operation”.

The EU hopes to be able to agree on sanctions that would phase out imports of Russian oil before the next European Council meeting, Council President Charles Michel said on Wednesday.

Even without a legal ban, self-penalization by many European companies has led to a record amount of Russian Urals crude oil in ships at sea as it struggles to find buyers.

On the other hand, the strict approach to the COVID-19 pandemic from China, the world’s largest oil importer. Beijing has imposed new restrictions while Shanghai plans to keep most restrictions in place this month.

(Reporting by David Gaffen; Additional reporting by Rowena Edwards, Stephanie Kelly and Scott DiSavino; Editing by Marguerita Choy)

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