Oil prices climbed on Friday as inventories at the biggest US crude storage hub in Cushing, Oklahoma, fell. Crude futures in New York gained 1.1% to a nearly seven-year high. Stockpiles at Cushing slid last week as traders sent more barrels to the US Gulf Coast for export. Analysts said the backwardation in oil prices is significant now, providing no incentive for traders to keep oil in storage.
However, data from the Energy Information Administration showed total US oil inventories rose by more than 6 million barrels last week, while oil output climbed for a fifth consecutive week. Industry sources said US refineries are entering the peak turnaround season, where plants typically process less crude.
The International Energy Agency said the soaring gas prices had prompted end-users, especially utilities, to switch to oil products. As a result, global oil demand is increasing and deepening the already sizable supply deficit in crude markets. According to the IEA, the switch could increase global oil demand by about 500,000 bpd over the coming six months. This led to the recent rally in oil prices as traders anticipated higher demand from the switch.
