NEW YORK (Reuters) – On Wednesday, oil prices jumped more than 2% to a high not seen in 13 weeks. This is because the U.S. keeps buying more gasoline even though pump prices are at a record high. At the same time, there are growing worries in several countries, including Iran, that China will increase its oil demand.
Iran said it was taking down two surveillance cameras set up by the International Atomic Energy Agency at a uranium enrichment facility. This came as the board of the United Nations’ nuclear watchdog passed a resolution criticising Iran for not giving a full explanation for uranium traces at sites that weren’t declared.
The move has made it harder for the US and other countries to talk to Iran about its nuclear program. It is also likely to keep sanctions in place and keep Iranian oil off the world market for a longer time.
Analysts say that a nuclear deal with Iran could add about 1 million barrels per day (bpd) of crude to the world’s supply.
U.S. West Texas Intermediate (WTI) crude went up $3.01, or 2.5%, to $123.58 per barrel, while U.S. West Texas Intermediate (WTI) crude went up $2.70, or 2.3%, to $122.11.
Both Brent and WTI had their highest closes since March 8, which was when they had their highest settlements since 2008.
The Energy Information Administration said that refiners’ inputs rose to their highest level since January 2020, which was a surprise. At the same time, crude oil in the Strategic Petroleum Reserve (SPR) fell by a record amount.
Gasoline stocks in the U.S. dropped by 800,000 barrels, which was a surprise, because demand for the fuel went up despite sky-high pump prices. Reuters asked a group of analysts, and they thought that gasoline stocks would go up by 1.1 million barrels.
“The gasoline draw is the most interesting part of the report because the market is tight all over the U.S.,” said Tony Headrick, an energy market analyst at CHS Hedging. He said that demand was still high even though pump prices were more than $5 per gallon in many parts of the country.
The auto club AAA said that on Wednesday, the average price of regular unleaded gasoline at retail hit a record high of $4.955 per gallon.
The major A-share indexes in China and the Hang Seng in Hong Kong both closed at their highest levels in two months. When restrictions put in place to fight the pandemic are lifted in the world’s largest oil importer, oil traders expect fuel demand to rise again.
Analysts at EBW Analytics said in a note that even record SPR withdrawals might not be enough to balance a market that is significantly undersupplied. This is because demand is rising in China and the U.S. based on the time of year.
The International Energy Agency warned that Europe could run out of energy next winter because of the sanctions that were put in place against Russia after it invaded Ukraine.
On the supply side, traders pointed out that a number of countries might have trouble increasing their output.
A number of oil workers in Norway plan to go on strike on June 12 over pay. This could stop some crude production.
Suhail al-Mazrouei, the Energy Minister of the United Arab Emirates, said that the Organization of the Petroleum Exporting Countries (OPEC) and their allies, such as Russia, are “not encouraging” in their efforts to increase output. He said this because the group is currently 2.6 million barrels per day (bpd) short of its goal.
