Oil prices rebounded on July 18, 2024, after three consecutive weekly declines in US crude stockpiles. The Energy Information Administration reported a drawdown of 4.87 million barrels last week, marking the biggest daily decrease since February and bringing nationwide inventories to their lowest level since that month. This development came as OPEC+ extended its production cuts into next year and Russia announced plans to reduce output even further.
The US crude stockpiles have been on a downward trend in recent weeks, with a drawdown of more than 20 million barrels in the last three weeks alone. This decline is significant as it comes during the driving season when demand for oil typically increases due to summer travel and weather disruptions.
The latest data from the EIA also showed that gasoline inventories rose by the most since January, casting doubt on fuel demand in the heart of the summer driving season. However, this increase was overshadowed by the larger drawdown in crude oil stocks.
Despite these positive signs for oil prices, some traders remain cautious due to concerns over poor demand from top importer China. The country recorded its slowest growth in five quarters in the three months to June, and the International Energy Agency has cited this as a major factor in weaker global oil demand growth.
Brent crude traded above $85 a barrel on July 18, while West Texas Intermediate was near $83. Both benchmarks have seen significant volatility in recent weeks due to concerns over supply and demand imbalances.
Oil bulls have a narrow window for bullish bets as the driving season and weather disruptions create a prime opportunity for a market rally. However, they must be cautious as global economic growth remains uncertain and geopolitical tensions could disrupt supplies at any time.
