International oil prices fell in the short-term, but the bulls are still supported by two forces

International oil prices fell on Thursday (June 9) after data released overnight showed that U.S. business inventories rose last week. However, now at the peak of summer gasoline demand, inventories are expected to continue to decline sharply in the coming months, which supports the bullish sentiment.

At 16:26 GMT+8, NYMEX crude oil futures fell 0.49% to $121.50 a barrel; ICE Brent crude futures fell 0.39% to $123.10 a barrel.


Data released overnight by the U.S. Energy Information Administration (EIA) showed that U.S. commercial inventories rose last week. Crude inventories unexpectedly rose by 2.025 million barrels in the week to June 3; refined oil inventories surged by 2.592 million barrels.

But U.S. gasoline inventories unexpectedly fell by 812,000 barrels last week, suggesting that demand for motor fuel was resilient during the peak summer months despite high gasoline prices. Moreover, the U.S. Strategic Crude Reserve remains at a record low as refiners ramp up production to pre-pandemic levels.

"Commercial crude inventories have increased in part due to inventory shifts due to reductions in the Strategic Petroleum Reserve, but these inventories are expected to continue to decline sharply in the coming months, supporting bullish sentiment," said Tony Headrick, energy market analyst at CHS Hedging.

Warren Patterson, head of commodities research at ING, said: "It's hard to see a clear downside in the coming months and petrol supply and demand will likely only tighten further as driving season demand is fuelling further."

EIA data showed apparent U.S. demand for all petroleum products rose to 19.5 million barrels per day, while gasoline demand rose to 8.98 million barrels per day, analysts at ANZ said in a note.

Most of the world's refineries are running near full capacity, with Asian refineries reporting record diesel margins as the West slaps sanctions on Russia over the war in Ukraine.

OPEC+ decided last week to increase production to 648,000 bpd in July and August, but it was not enough to make up for Russia’s output cuts this summer, as those increases were distributed pro rata to OPEC+ producers, many of whom produce The country does not actually have the capacity to increase production.

"Unless new capacity in the Middle East comes on stream faster than we expect...the shortage of (refined) products will only intensify as demand for transportation fuels picks up in the northern hemisphere during the summer," JPMorgan said in a report on Wednesday. In addition, Trafigura CEO In the current context, oil prices could hit $150 this year, he said.