Alberta oil well in canola field
Oil prices dipped on Thursday but still held close to their highest in almost three years, supported by drawdowns in U.S. inventories and accelerating German economic activity.
Doubts about the future of the 2015 Iran nuclear deal that could end U.S. sanctions on Iranian crude exports also helped prices.
U.S. crude slipped 40 cents, or 0.55%, to $72.84 a barrel, after hitting a session high of $73.61 earlier.
Brent dipped 39 cents, or 0.53%, to $75.00 a barrel, after earlier rising to $75.78.
Both benchmarks had hit their highest since October 2018 on Wednesday before paring back gains.
“The narrative is unchanged: the bounce in Western-world commuting and leisure activity fuels oil demand and drains oil supplies,” Norbert Rücker, head of economics at Julius Baer, wrote in a note.
Further stoking expectations of a European fuel demand recovery, data from Germany showed the largest upward leap in retail conditions since German reunification more than three decades ago.
Across the Atlantic, U.S. crude inventories dropped to their lowest since March 2020, official data showed. U.S. gasoline stocks also posted a surprise draw.
The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+ that meets on July 1, have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made, two OPEC+ sources said on Tuesday.
Indian Oil Minister Dharmendra Pradhan on Thursday urged OPEC to phase out crude output cuts as high prices are stoking inflation.
“Given the good sentiment and robust demand, OPEC+ is likely to find it easy next week to announce a further increase in production, at least for August, without jeopardising the upswing enjoyed by the oil price,” Commerzbank analysts wrote.
They said “the currently positive general tenor on the oil market” was driving prices up.
Brent has gained more than 45% this year on the OPEC+ supply cuts and recovering demand. Some industry executives have talked of crude returning to $100 for the first time since 2014.
Iran said on Wednesday the United States had agreed to remove all sanctions on Iran’s oil and shipping but Washington said “nothing is agreed until everything is agreed” in talks to revive the 2015 Iran nuclear deal.