Oil hits multi-year highs after US crude inventories drop

Oil prices rose on Wednesday, extending gains for the fifth straight day, as the US crude hit a 3-year high and Brent hit a 2-year high, following a large drop in the US crude inventories according to preliminary data, and ahead of the EIA's official report.

US crude rose 0.5% to the highest since October 2018 at $72.80 a barrel, after opening at $72.44, and hit a high at $72.19, and Brent crude rose 0.7% to the highest since April 2019 at $74.72 a barrel, after opening at $74.24, and hit a low at $74.08.

The US crude gained 1.8% yesterday, and Brent crude rose 1.6% in the third straight daily gain, thanks to a strong global demand outlook during the second half of 2021 and growing odds for a market supply deficit.

The American Petroleum Institute reported today in preliminary data that the US crude inventories fell 8.5 million barrels during the week ending June 11, while analysts forecast a drop by 4.2 million barrels.

The total US commercial inventories fell to 472.8 million barrels, which is the lowest level since the week ending March 27, 2020, in a positive sign of the US domestic demand.

The US Energy Information Administration's official data will be released later today, amid forecasts for inventories to drop by 2.1 million barrels.