Oil prices edged higher to close near one-week highs as better U.S. demand offset the risk Iran

Oil prices closed higher on Wednesday as a drop in U.S. crude inventories reinforced expectations of improved demand ahead of the summer driving season offset concerns about rising supply Iran.

Brent crude futures ended up 16 cents, 0.3 percent, at $68.87 a barrel, while U.S. crude futures ended up 14 cents, 0.2 percent, at $66.21.

U.S. government data showed crude oil inventories at Cushing, Oklahoma, last week fell to their lowest since March 2020 refiners increased capacity utilization to pre-pandemic levels. Crude has since recovered its losses.

U.S. crude oil inventories fell last week to their lowest level since late February, the Energy Information Administration reported, while gasoline product supply, a measure of demand, rose to 9.5 million barrels a day distillate demand also increased. Gasoline consumption typically picks up around Memorial Day, which this year falls on May 31, when people are driving more. Fuel demand continues to highlight the progress the U.S. is making in returning to normal consumption levels.

Tortoise portfolio manager Matt Sallee: "Every data point in the report is somewhat bullish. The data reinforce the view that US producers remain restrained, but the country is leading the global recovery.

Jim Ritterbusch, president of Ritterbusch Associates, said: "The impulse to get on the road go on vacation, which was blocked last year by the pandemic, is going to support the gasoline market."

Bill O 'Grady, executive vice president at Confluence Investment Management in New York, said: "The fundamentals in the U.S. are very supportive inventories are down at the start of the summer travel season, which is why the market is holding up even though Iran may be coming back."

The United States has resumed negotiations on a nuclear deal with Iran

Market participants are also keeping a close eye on developments in the Iran-US nuclear talks, which could lead to the lifting of sanctions on Iran's energy sector push Iranian oil into the market.

Iranian government spokesman Ali Rabiei said on Tuesday: "He is optimistic that the talks between Iran major powers will soon produce an agreement to restore the 2015 nuclear deal, but Iran's chief negotiator said serious problems remain."

Meanwhile, world powers are continuing talks to revive a nuclear deal with Iran that could pave the way for the lifting of sanctions the release of large quantities of Iranian oil hidden in tankers at sea.

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Source: International Petroleum Network