The oil market is on the rise in the middle of the week driven by the reports about lower reserves in the USA. The market is concerned about future supply in the market given escalating tensions in the Middle East.
According to the market data, September futures for the Brent benchmark on London ICE Futures soared to some $65.87/bbl. WTI oil in August futures on NYMEX rose to $59.39/bbl.
The market is waiting for the release of the monthly reports from the cartel and IEA. The data will be unveiled later this week.
The American Petroleum Institute in the recent report stated that oil reserves in the USA dropped by 8.13 million bbl. The reserves of petroleum decreased by 257,000 bbl, while distillates increased by 2.1 million bbl.
Meanwhile, the US Energy Department will publish official reserves report today. The market experts forecast that oil reserves will dip by 2.1 million bbl, petroleum – 400,000 bbl, and those of distillates will add 1.5 million bbl.
If the official data correspond to the forecasts and API, the reserves in the USA will post a decline for the fourth week in a row.
As for the Middle Eastern tensions, Iran's President threatened the UK with heavy consequences following the arrest of the vessel with Iran's oil near Gibraltar. For reference, the oil tanker Grace 1 was supposed to carry Iranian oil violating EU sanctions and thus was arrested by the Gibraltar authorities.
Notably, the EC downgraded its 2-year oil price forecast. This year, Brent price is expected at $64.7/bbl ($69.2/bbl earlier), while next year quotes can slide to $61.5/bbl ($67.8/bbl).