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Oil Extends Gain After US Stockpiles Shrank Most in Two Months

(Bloomberg) -- Oil crept higher for a second day as unusually low US stockpiles continue to challenge the view that the market is headed for a global supply glut later this year.

Brent traded above $67 a barrel, extending Wednesday’s 1.6% gain, though well within a tight range futures have been stuck in for more than two weeks during thin summer trading.

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The volumes of crude held in storage tanks across the US fell by 6 million barrels last week, the most since mid-June. Gasoline stockpiles also declined for a fifth straight week, offering a reminder that, while many traders expect a surplus later this year, global inventories are still abnormally low. Jet fuel demand remains very strong.

Oil is still down more than 10% this year on concerns US trade policies will impact economic growth at a time when OPEC+ nations are returning idled production, raising expectations for a glut once peak summer demand ends. Traders are also keeping an eye on progress toward a ceasefire in Ukraine that could pave the way for less restrictions on Russian crude.

“The market continues to weigh a mix of bullish and bearish drivers that, which together with thin summer liquidity, are keeping prices boxed in,” said Ole Hansen head of commodities strategy at Saxo Bank.

Brent has trade between $65 and $70 a barrel since Aug. 4.

On a bearish note, crude inventories in the key US storage hub at Cushing, Oklahoma, rose for a seventh week, according to US Energy Information Administration numbers released Wednesday. The delivery point for West Texas Intermediate futures has seen a recent surge in supplies from the Permian Basin.