Oil advances on tight supply and an expected rise in demand

Storage tanks are seen at the Petroineos Ineos oil refinery in Lavera, France, March 29, 2022. REUTERS/Benoit Tessier

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  • French minister optimistic about EU oil embargo
  • Memorial Day weekend trips to the United States will be the busiest in two years
  • U.S. EIA crude and product storage data due later Wednesday

LONDON, May 25 (Reuters) – 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 consumer of crude.

Brent futures for July rose for a fifth straight session, gaining $1.69, or 1.5%, to $115.25 a barrel at 0940 GMT.

U.S. West Texas Intermediate (WTI) crude for July delivery rose $1.86, or 1.7%, to $111.63.

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Oil prices are supported by a tight supply of gasoline, with inventories of refined petroleum products down 4.2 million barrels last week, market sources said on Tuesday, citing figures from the American Petroleum Institute. .

Data on U.S. government inventories are due on Wednesday, with analysts polled by a Reuters poll expecting U.S. crude oil and gasoline inventories fell last week.

“Just ahead of the summer driving season, U.S. gasoline inventories are at their lowest seasonal level since 2014,” said Commerzbank analyst Carsten Fritsch.

Memorial Day weekend trips in the United States are expected to be the busiest in two years, leading to increased demand for fuel as more drivers hit the road and shed pandemic restrictions coronavirus despite high fuel prices. Read more

Meanwhile, global crude supplies continue to tighten as buyers shun oil from Russia, the world’s second largest exporter, following the invasion of Ukraine, which Moscow calls a “special military operation”.

France’s new foreign minister said on Tuesday she was optimistic about the prospect of reaching an agreement on a European Union sanctions package that would phase out imports of Russian oil into the bloc despite ongoing opposition. from certain backgrounds. Read more

“With explicit bans on importing Russian crude into the US and UK, and oil companies reluctant to buy even without formal legal barriers, self-sanctions are still causing supply shortages,” Stephen said. Innes, managing partner of SPI Asset Management, in a note.

A record amount of Russian Urals crude sits in ships at sea as it struggles to find buyers. Read more

On the other hand, the strict approach to the COVID-19 pandemic from China, the world’s largest oil importer. Beijing has imposed new restrictions while Shanghai plans to keep most restrictions in place this month. Read more

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Reporting by Rowena Edwards Additional reporting by Arathy Somasekhar in Houston and Isabel Kua in Singapore Editing by David Goodman

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