Oil prices edged higher in Asian trade today as investors anticipated a fall in US crude oil inventories for the third consecutive week, renewing hopes of resurgent demand, analysts said.
New York’s main contract, West Texas Intermediate light sweet crude for delivery in August, gained eight cents to $106.40 a barrel in morning trade, while Brent North Sea crude for August delivery was up seven cents to $109.16.
“Investors think there is potential for the US crude oil stockpiles to dip further, and that is putting upward pressure on prices,” Jason Hughes, head of sales trading at CMC Markets in Singapore, told AFP.
Oil inventories in the United States have fallen more than 20 million barrels over the last two weeks, according to data from the Energy Information Administration (EIA).
The rapid drawdown in US crude oil stocks comes amid the country’s busy driving season, when Americans take to the roads for their annual summer holidays.
The EIA will release the official crude oil inventory data for the week to July 12 later Wednesday.
Gains over upbeat sentiment about crude oil demand in the US have however been limited by a stronger dollar and concerns that the US central bank will taper off its economic stimulus measures soon, Hughes said.
Dollar-priced oil becomes more expensive for holders of weaker currencies if the greenback strengthens, denting demand and putting downward pressure on prices.
“There also remains some concern that all the upbeat sentiment about the US economy will translate to stimulus tapering by the Fed,” Hughes said.