Brent edges higher as demand outlook improves

The front-month ICE Brent contract has gained by $0.84/bbl on the day, to trade at $67.42/bbl at 09.00 GMT.

IMAGE: Crude oil storage tanks. Getty Images

Upward pressure:

Brent’s price has moved higher amid signs of strong demand in the world’s largest oil consumer – the US.

Commercial US crude oil inventories have dropped by 6 million bbls to touch 421 million bbls for the week ending 15 August, according to data from the US Energy Information Administration’s (EIA).

“Crude oil prices rebounded as signs of strong demand in the US boosted sentiment,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

A drop in US crude stocks typically indicates higher demand and can lend some support to Brent's price.

Downward pressure:

Oil market traders remain cautious, keeping a close watch on peace talks aimed at ending Russia’s war in Ukraine.

Earlier this week, officials from the US and NATO met to discuss security measures for Ukraine to help forge a peace agreement, Bloomberg reports. This news has added some downward pressure on Brent’s price.

A US-mediated ceasefire deal between the two eastern European nations may open the door to lifting energy sanctions on Moscow, according to market analysts.

“Any peace deal is likely to lead to fewer restrictions on Russian crude oil,” Hynes added.

By Aparupa Mazumder

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