On Thursday, the price of oil increased by roughly 3% to a one-week high due to a weaker US currency and an increase in refinery operations in China, the world’s biggest crude importer.
U.S. West Texas Intermediate (WTI) oil increased $2.35, or 3.4%, to end at $70.62, while Brent futures increased $2.47, or 3.4%, to reach $75.67 a barrel.
The gasoline crack spread, a measure of refining profit margins, reached its highest level in the US since July 2022. Meanwhile, U.S. diesel futures increased by almost 5% to reach their highest level since late April.
U.S. data that retail sales unexpectedly increased in May and higher-than-expected unemployment claims last week caused the dollar to drop to a five-week low against a basket of other currencies both helped the oil market.
A declining dollar makes petroleum less expensive for holders of foreign currencies, which might increase demand for oil.
The throughput of China’s oil refineries increased by 15.4% in May compared to a year earlier, reaching its second-highest level ever, according to data released on Thursday.
The second half of the year could see further growth in Chinese demand for oil, according to the CEO of Kuwait Petroleum Corp.
As predicted, the European Central Bank (ECB) increased interest rates on Thursday to a 22-year high. In order to combat the strong inflation, it indicated more policy tightening.
Consumer borrowing costs ultimately rise with higher interest rates, which might impede economic development and lower demand for oil.
On the supply side, economists anticipate Saudi Arabia’s voluntary oil output cutbacks in July and the Organization of the Petroleum Exporting Countries (OPEC) and allies’ voluntary cuts in May to sustain prices during a period of high demand.
Around 1.5 million barrels per day (bpd) of a supply imbalance are anticipated by UBS in June, and more than 2 million bpd in July. The bank predicted that oil prices would rise once these gaps in on-land oil stockpiles were apparent.