(Bloomberg) -- Oil held gains near the highest close in three months after crude stockpiles shrunk at a key US storage hub and gasoline inventories fell for a 10th week, exacerbating market tightness.
West Texas Intermediate futures traded above $122 a barrel after settling 2.3% higher on Wednesday. Crude supplies at the Cushing hub sunk to the least since early March, while gasoline inventories are at the lowest seasonal level in eight years, according to Energy Information Administration data.
The four-week average for motor fuel demand rose to 9 million barrels a day for the first time this year following the Memorial Day weekend, the traditional start of the US summer driving season. Consumption is rising even as the retail price for gasoline -- already at a record -- approaches $5 a gallon.
Crude has maintained its upward momentum this year as economies rebounded from the pandemic, with Russia’s invasion of Ukraine upending trade flows and leading to further tightening. Prices are “nowhere near” their peak and China’s recovery from virus outbreaks threatens to strain the market, according to the United Arab Emirates, a major OPEC producer.
Goldman Sachs Group Inc (NYSE:GS). said this week that prices needed to rally further to achieve the demand destruction required for market rebalancing. The bank increased its quarterly forecasts for this year and into 2023, raising its WTI estimate for the next quarter to $137 a barrel.
US gasoline stockpiles dropped by 812,000 barrels to 218.18 million barrels last week, according to the EIA. The 10 weeks of declines is the longest run since 2019. Nationwide crude inventories rose by 2 million barrels.
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