By Ambar Warrick
Investing.com– Oil prices hit a two-week high on Thursday as pressure from the dollar eased, while record-high U.S. crude exports suggested that global oil demand remained robust despite recent economic headwinds.
Crude prices extended gains into a third straight session, with markets largely looking past a bigger-than-expected rise in U.S. , given that the bulk of the surplus came from the Biden Administration’s drawdown of the Strategic Petroleum Reserve (SPR).
Markets cheered the data showing that crude oil exports from the United States rose to a record high of 5.1 million barrels per day. This indicates that there is some resilience in global demand, despite rising inflation rates.
U.S. gasoline consumption also remained high with an increase of 1.5 million barrels, which was higher than expected. Due to the eight-year low in inventories, traders are preparing for a fuel shortage in the United States.
London-traded crude rose 0.3% on Thursday to $94.08/barrel, while it rose 0.3% at $88.15/barrel as of 22.12 ET (02.12 GMT). Both contracts rose between 2 and 4 percent on Wednesday and were trading at new highs for the second week.
Further benefiting the prices, the index fell to an over-one-month low on Thursday as traders bet that an economic slowdown could force the bank to slow down its pace of interest rates increases.
Due to rising interest rates, the dollar’s strength has had a significant impact on crude markets, making it more expensive to import dollar-denominated oil.
Oil prices rose sharply this month from their annual lows after the Organization of Petroleum Exporting Countries and Allies, (OPEC+), announced its largest supply cut since 2020’s COVID-19 pandemic.
This, combined with sanctions against Russia, is expected to tighten supply towards year’s end.
However, the U.S. threatened a counter-tightening by releasing more oil through the SPR. The White House released approximately 3.4 million barrels crude oil from the SPR last Wednesday, bringing the stockpile down to its lowest level since 1984.
Oil demand in the world’s largest importer, China, is also expected to remain weak in the coming months, given that the country has no plans to scale back its strict zero-COVID policy.