“Oil prices have been rising steadily for the past two months, driven by large increases in the prices of refined products due to tight refining supply and increased demand,” traders said.
All over the world, refineries closed facilities and capacity is tight also due to reduced activity in Russia, the world’s largest exporter of crude oil and fuelafter the invasion of Ukraine.
The peak in demand for fuel in the summer in the United States continued to boost crude prices. The United States and other countries have released strategic reserves, but their effect has so far been limited as world oil production rises only slowly.
“I think higher energy prices will be here for the rest of the year unless we see some breakthrough that gets a significant amount of crude back on the market,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
US fuel stocks unexpectedly lower last weekaccording to government data, indicating the resilience of demand during the peak consumption period, despite high prices at the pumps.
Four-week US demand stood at around 9 million barrels a day, just 1% below the 2021 level.
“Even though prices are higher, we haven’t seen a significant drop in demand yet,” said Thomas Saal, senior vice president at StoneX Financial. “That can happen any day, but people keep driving.”
Refiners couldn’t keep up with demand. The United States is close to its maximum processing capacity, while China has kept refineries offline due to restrictions related to Covid-19.
Source: Ambito
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