Oil Near Highs As Trade Awaits Weekly U.S. Inventory Snapshot

© Reuters.

By Barani Krishnan

Investing.com - Crude prices were near multi-year highs on Tuesday as market participants awaited the release of a weekly snapshot on U.S. inventories that gives an insight into demand against a global choke down on supply by the biggest oil producing countries.

U.S. crude’s West Texas Intermediate benchmark settled up 89 cents, or 1.1%, at $84.65 per barrel. WTI hit a seven-year high of $85.41 on Monday. 

London-traded Brent crude, the global benchmark for oil, settled up 41 cents, or 0.5%, at $86.40. Brent hit a three-year high of $86.70 in the previous session.

WTI is up nearly 75% on the year while Brent is showing a 65% gain from a worldwide rationing in supply by the Organization of the Petroleum Exporting Countries and their allies, collectively known as OPEC+.

The OPEC+ cutbacks began 18 months ago in response to the decimation of oil demand during the heights of the coronavirus outbreak. But with the outbreak now well under control for months, the alliance is using so-called fears of a resurgence of the pandemic as an excuse not to raise production beyond a token 400,000 barrels per day over the next five months — versus demand growth expected at well over 1 million bpd.

Tuesday’s run-up in oil came ahead of a weekly snapshot on U.S. crude, gasoline and distillate stockpiles due from the American Petroleum Institute at 4:30 PM ET (20:30 GMT). The figures will serve as a precursor to the official weekly inventory data due on Wednesday from the EIA, or U.S. Energy Information Administration. 

Analysts tracked by Investing.com have forecast that crude inventories rose by 1.91 million barrels for the week ended Oct 22, versus the previous week’s draw of 431,000 barrels.

Gasoline inventories likely dropped by 1.86 million barrels, on top of the decline of 5.37 million in the previous week, forecasts showed.

Stockpiles of distillates, which include diesel and heating oil, are expected to have risen by 2.31 million barrels, after the previous week’s drop of 3.91 million.