US crude inventories fell by 7.6 million barrels last week to June 18 to 459.1 million barrels, the US Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 3.9 million-barrel drop.
Stockpiles at Cushing, Oklahoma, the delivery point for US crude futures, fell by 1.8 million barrels to the lowest since March 2020. Gasoline demand also edged higher last week, helping to support prices.
“People are getting back in their cars again and that’s showing up in the numbers in a big way. That’s going to keep the upward pressure on prices,” Phil Flynn, senior analyst at Price Futures Group in Chicago said.
Brent crude rose $1.02, or 1.4%, to $75.83 by 10:49 am ET (1449 GMT,) having touched its highest since October 2018 at $76.02 after the EIA data. US West Texas Intermediate added $1, or 1.4%, to $73.85 and hit $74.25, also the highest since October 2018.
“The inventory relief could provide another reason for the Opec+ alliance to boost production further from August and the coming meeting next week is expected to be material for policy and prices going forward,” said Rystad Energy’s oil markets analyst Louise Dickson.
Brent has gained more than 45% this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries and its allies (Opec+) and as easing coronavirus restrictions boost demand. Some oil industry executives are even talking of crude returning to $100, a level last reached in 2014.
“Underlying demand in the physical market means that any corrections lower will remain shallow and short,” said Jeffrey Halley, analyst at brokerage OANDA.
Opec+, which meets on July 1, have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made on exact volumes, two Opec+ sources said on Tuesday.
Global demand is set to rise further in the second half of the year, though Opec+ also faces the prospect of rising Iranian supply if talks with world powers lead to a revival of Tehran’s 2015 nuclear deal.
A retreat in the US dollar has also helped to prop up oil, making crude less expensive for buyers holding other currencies.