Investors Bullish on Oil Amid Positive Demand Outlook

Oil prices rose on Wednesday, with Brent gaining for a fifth day in a row as as falling stockpiles and a recovery in demand are cheering the bulls on.

US oil inventories dropped by 8.5 million barrels in the week ended June 11, according to two market sources. Crude stocks were expected to have fallen for a fourth week in a row, dropping by about 3.3 million barrels last week, according to analysts polled by Reuters. Official government data is due on Wednesday.

Executives from major oil traders said on Tuesday they expected prices to remain above $70 a barrel and demand to return to pre-pandemic levels in the second half of 2022.

"Even non-energy traders are placing bets that oil prices will continue to rise. Everyone is turning overly bullish with crude prices. The crude demand outlook is very robust as recoveries across the US, Europe and Asia, will have demand return to pre-COVID levels in the second half of next year”, said Edward Moya - senior market analyst at OANDA.

Vitol Chief Executive Russell Hardy said oil is likely to trade in a range between $70 and $80 a barrel for the rest of this year on the expectation that OPEC+ will keep up its output restraints. According to him, even the return of Iranian exports if the US rejoins a nuclear agreement and lifts sanctions on Tehran is unlikely to change the bullish picture.

Brent was seen up 0.9%, at $74.68 a barrel by 02.00 GMT, having risen 1.6% on Tuesday.

Crude, in turn, rose 0.9%, to $72.78 a barrel, after gaining 1.7% in the previous session.

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