NEW YORK:

Oil prices jumped over 2% to a 13-week high on Wednesday as US demand for gasoline keeps rising despite record pump prices, while expectations that China’s oil demand will increase faced growing supply concerns in several countries, including Iran.

Iran said it was removing two International Atomic Energy Agency surveillance cameras at a uranium enrichment facility as the board of the United Nations’ nuclear watchdog passed a resolution criticising Iran for failing to fully explain uranium traces at undeclared sites.

The move has raised tensions with the United States and other countries negotiating with Iran over its nuclear programme, and will likely keep sanctions in place and Iranian oil out of the global market for longer.

Analysts have said a nuclear deal with Iran could add about 1 million barrels per day (bpd) of crude to world supply.

Brent futures rose $3.01, or 2.5%, to settle at $123.58 a barrel, while US West Texas Intermediate (WTI) crude rose $2.70, or 2.3%, to end at $122.11.

Those were the highest closes for both Brent and WTI since March 8, which were their highest settlements since 2008.

Read Oil prices dip but stay close to $120

US commercial crude oil inventories rose unexpectedly last week, while crude in the Strategic Petroleum Reserve (SPR) fell by a record amount as refiners’ inputs rose to their highest since January 2020, the Energy Information Administration said.

US gasoline stocks fell by a surprise 800,000 barrels as demand for the fuel rose despite sky-high pump prices. Analysts polled by Reuters had expected gasoline stocks to rise 1.1 million barrels.

“The gasoline draw is a highlight of the report with a tight market place across the US,” said Tony Headrick, energy market analyst at CHS Hedging, noting demand remained strong even with pump prices above $5 per gallon in many parts of the country.

Auto club AAA said national average retail regular unleaded gasoline prices hit a record $4.955 per gallon on Wednesday.

 

Published in The Express Tribune, June 9th, 2022.

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