Oil Prices Pare Gains Despite Concerns Over Supply

Investing.com – U.S. crude futures pared some gains on Thursday after gaining more than 3% in the last session amid concerns over supply.

 for August delivery were trading at $72.56 a barrel at 10:50PM ET (02:50 GMT), down 0.30%. for September delivery, traded in London, were also down 0.1% at $77.41 per barrel. 

Meanwhile, for September delivery gained 3.4% at 493.3 yuan per barrel. 

Oil prices have been rallying since the beginning of the year on tightening market conditions and voluntary supply cuts led by the Middle East dominated producer cartel of the Organization of the Petroleum Exporting Countries (OPEC).

Oil prices surged on Wednesday after the American Petroleum Institute (API) reported a 9.2 million barrel reduction in U.S. crude inventories in the week to June 22 to 421.4 million barrels, which was a larger-than-expected fall. Unplanned supply disruptions in Canada and Libya also remained in focus.

Meanwhile, reports that the starting from November also provided some support for oil prices.

“Oil prices were flying higher overnight after catching an updraft from the U.S. administration calling for allies to cut Iran imports to zero tolerance,” said Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA. 

He also warned “Libya will continue to be a significant point of concern in the oil supply chain”. 

But physical oil market remains well supplied despite record demand and ongoing disruptions, according to analysts.

“The physical oil market is well supplied,” said Konstantinos Venetis, senior economist at research firm TS Lombard, although he warned OPEC and Russia were producing at near maximum output “leaving a thinner margin of safety for the future.”

Last week, the Organisation of Oil Exporting countries While the decision was widely anticipated, the supply boost was less than some investors had anticipated.   

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