(Bloomberg) — Oil advanced after a US government report reinforced expectations of tighter near-term supplies, injecting some bullishness about the market’s fundamentals.
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West Texas Intermediate futures rose 0.9% to approach $70 a barrel and notch the highest closing price this month. US inventories fell by 3.34 million barrels last week and now sit at the lowest levels in about a month, US government data showed. Gasoline inventories also dropped.
The gain underscores a sharp reversal in sentiment in a market that had taken a bearish lurch to start the month. Traders have been snapping up bullish oil options as US President Donald Trump ramps up pressure on Iranian oil exports. More levies are due next week, including a duty on buyers of Venezuelan crude and gas.
Prices are “finding support by expectations of tightening supplies in the short-term outlook, putting concerns about demand on a back burner,” said Fawad Razaqzada, a market analyst at City Index and Forex.com.
The upward momentum has spurred commodity trading advisers, which tend to exacerbate price swings, to flip to net long in Brent on Wednesday, according to data from Bridgeton Research Group. WTI is positioned at 54% short, compared with 82% short on March 17, the firm said.
Even so, some of the world’s top traders gathered at the Financial Times Commodities Global Summit in Lausanne on Tuesday reiterated a pessimistic outlook for the rest of this year. Oil is still down more than 10% from this year’s peak in mid-January as US tariffs and retaliatory measures from targeted nations inject volatility into global markets.
OPEC+ output policy, as well as Trump’s trade and sanctions plans, have the potential to reverse forecasts to the downside, the traders said.
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