By Barani Krishnan
Investing.com - Oil prices pushed to 2018 highs on Wednesday as market participants awaited with enthusiasm for data that could provide the first insight into what this summer’s demand for motoring and gasoline consumption could be.
The American Petroleum Institute is scheduled to report at 4:30 PM ET (21:30 GMT) a sampling of crude oil, gasoline and distillates inventory for the week to May 28, ahead of U.S. government data for the same due on Thursday.
While the weekly period in the data reported by both the API and U.S. Energy Information Administration is only through Friday, it is expected to give an early indication into how much motorists would have filled up during the three-day break leading to Monday’s Memorial Day holiday.
The Memorial Day unofficially marks the start of the peak U.S. summer driving season, and the American Automobile Association expects as many as 37 million travelers for the occasion this year, up 60% from last year’s pandemic-suppressed number of 23 million. Those driving over the three-day stretch usually fill their tanks more than once, typically resulting in a boon for gasoline consumption.
Bets for roaring U.S. oil consumption this summer helped crude prices hit their highest levels since 2018 this week despite the 13-member Organization of the Petroleum Exporting Countries and their 10 non-member allies — together known as OPEC+ — going ahead with a production hike.
“While large parts of Asia continue to struggle with COVID-19, energy markets remain fixated over the overwhelming strong demand that is coming out of the U.S. and Europe,” said Ed Moya, analyst at online trading platform OANDA.
“In normal times, the oil price surge since the beginning of the year would have threatened the upcoming driving/flying season, but coming out of pandemic, that will not derail most travel plans.”
West Texas Intermediate crude, the benchmark for U.S. oil, was up $1.03, or 1.5%, to $68.75 per barrel by 1:55 PM ET (17:55 GMT), after scaling $69 earlier, its highest since October 2018.
Brent crude, which acts as the global benchmark for oil, rose $1, or 1.4%, to $71.25 a barrel. Brent earlier soared to $71.47, its highest since January 2020.
“It looks like $70 will be the near-term target for WTI, while for Brent, it will be $75,” said John Kilduff, founding partner at New York energy hedge fund Again Capital. “But of course, today’s API and tomorrow’s EIA will have a big part in deciding where we go with those targets.”
According to a consensus of analysts tracked by Investing.com, U.S. crude stockpiles likely fell by 2.44 million barrels last week after the previous week’s drop of 1.66 million.
The EIA is also expected to report a gasoline drawdown of 1.48 million barrels to add to the previous week’s consumption of 1.75 million.
For distillates inventories, the agency is likely to report a decline of 1.48 million barrels after the previous week’s drop of 3.01 million.