Oil on the rise, encouraging US demand

Brent finished near the $100 mark, rising 2.25% to $99.60, and WTI ended up 2.62% at $94.34.

Crude oil prices rose on Thursday, supported by more resilient than expected US demand but also by a likely switch from gas to oil in some European countries with rising gas prices.

The barrel of Brent from the North Sea for delivery in October ended up 2.25% at 99.60 dollars.

A barrel of US West Texas Intermediate (WTI) for September delivery climbed 2.62% to $94.34.

Prices advanced after “the positive surprise on inflation” US Wednesday, recalled Craig Erlam, analyst at Oanda.

US inflation slowed more than expected to reach 8.5% in July year on year.

In addition, despite an increase in weekly inventories of US crude, those of gasoline fell, showing a rebound in demand for fuels.

U.S. commercial crude reserves rose 5.5 million barrels to 432 million barrels for the week ended Aug. 5, surprising analysts who had expected a one-million-barrel decline.

But fuel inventories fell by 5 million barrels, another surprise for analysts, pushing prices higher.

A report by the International Energy Agency (IEA) “acknowledged on Thursday that Europe is in trouble and that some countries will have to turn to oil rather than gas to keep the lights on”, underlines Phil Flynn of Price Futures Group.

The IEA explained that the price of gas and electricity having jumped to new records at a time when world oil demand is revised upwards, this will encourage “the switch from gas to oil in certain countries”.

“With several regions experiencing scorching heat waves, the latest data confirms an increase in the use of oil to generate electricity, particularly in Europe and the Middle East but also across Asia” , noted the IEA.

Lastly, in the United States, the decline in petrol prices at the pump, which fell below the symbolic mark of 4 dollars per gallon (3.78 litres) for the first time in five months, had a positive effect on crude prices.

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