NEW YORK (CNBC) - Oil prices rose on Wednesday, buoyed by tight supplies and the prospect of rising demand from the summer driving season in the United States, the world’s biggest crude consumer.
Brent crude futures for July rose for a fifth session running, gaining $1.24, or 1.1%, to trade at $114.81 a barrel. U.S. West Texas Intermediate (WTI) crude for July delivery rose $1.46, or 1.3%, to $111.23.
Oil prices are gaining support from tight gasoline supply, with inventories of the refined oil product down by 4.2 million barrels last week, market sources said on Tuesday, citing American Petroleum Institute figures.
“Just ahead of the summer driving season, U.S. gasoline stocks find themselves at their seasonally lowest level since 2014,” said Commerzbank analyst Carsten Fritsch.
U.S. Memorial Day weekend travel is expected to be the busiest in two years, causing fuel demand to rise as more drivers hit the road and shake off coronavirus pandemic restrictions despite high fuel prices.
At the same time, global crude supplies continue to tighten as buyers avoid oil from Russia, the world’s second-largest exporter, after the invasion of Ukraine, which Moscow calls a “special military operation”.
France’s new foreign minister on Tuesday said she was optimistic on the prospect of securing agreement on a European Union sanctions package that would phase out Russian oil imports to the bloc despite current opposition in some quarters.
“With explicit bans on importing Russian crude in the U.S. and UK, and oil companies reluctant to buy even without formal legal obstacles, self sanctions are still causing supply shortages,” said SPI Asset Management managing partner Stephen Innes in a note.
On the flip side is the strict approach to the COVID-19 pandemic from China, the world’s biggest oil importer. Beijing has imposed new curbs while Shanghai plans to keep most restrictions in place this month.