Crude Extends Gains Trading At 15-Month High On Rising Demand

Crude oil extended this week’s gains and is trading at a 15-month high above $107.00 on lower inventories and amid expectations the US Federal Reserve will keep its stimulus program to aid the economy; tensions in the Middle East persist.

The Energy Information Administration data yesterday showed that US crude inventories dropped by 9.87 million barrels last week after falling fell by 10.3 million barrels the previous week; this would be the biggest two-week decline on record.

The data shows that demand for oil is clearly on the rise, especially in the world’s largest oil consumer. Gasoline stockpiles fell by 2.6 million barrels last week while distillates, including heating oil and diesel, rose by 3 million.

- Crude is trading around $107.03 a barrel after rising $0.51

- Brent is trading around $108.77 a barrel after rising $0.26

Oil prices were also supported by the minutes of the US Federal Reserve`s June meeting which showed that policymakers await more signs of improvement from the job market before starting to reduce stimulus; this pushed the US dollar lower.

Adding to the upside pressures is the escalating tensions in Egypt, after prosecutors ordered the arrest of the Muslim Brotherhood leader and nine other Islamists on grounds they incited deadly clashes, supporting worries of a possible disruption in oil shipments.

The positive start of the second-quarter earnings season in the US also provides support to oil prices; markets will be watching today the ECB’s monthly report and the US’s jobless claims and monthly budget.

- Natural gas is trading at $3.657 per cubic feet after falling 0.63%

- Gasoline is trading at $3.0107 a gallon after falling 0.14%

- Heating oil is trading at $3.0122 a gallon after rising 0.35%

The rise of crude prices above the $105-mark and staying at those high levels for a long time could start hurting the stock market and growth, cause at these elevated levels it starts to hurt consumers spending.