Oil prices moved higher for a third day on Friday with traders seeing solid summer demand amid falling U.S. inventories even as supply is on the rise.

West Texas Intermediate crude oil for August delivery was last seen up US$0.55 to US$65.79 per barrel, while August Brent crude was up US$0.52 to US$68.25.

The rise comes as the market calms after the end of the 12-day war between Israel and Iran collapsed a risk premium for the commodity, sending prices down 14% from a five-month high and returning oil to the narrow range it has stuck to for most of the past two months.

However Wednesday's inventory report from the Energy Information Administration that showed U.S. oil stocks fell by a much more than expected drop of 5.9-million barrels offered the market some confidence that summer demand remains solid.

"The weekly oil statistics on US oil stocks were unconditionally bullish as the major categories all registered significant drawdowns: crude oil 5.9 million bbls, gasoline 2.1 million bbls, distillates 4.1 million bbls taking commercial inventories 4.2 million bbls lower than the previous week. Implied demand holds resolutely above 20 mbpd as refiners supplied 9.7 mbpd of gasoline last week, the highest since December 2021," PVM Oil Associates noted.

The drop in U.S. stocks comes despite rising supply into the market that is expected to reverse declining inventories. OPEC+ will meet on July 6 and is likely to approve a fifth monthly supply increase of 411,000 barrels per day as the group continues to move away from supporting prices and looks to grab market share amid rising production from North and South American producers.

Source: MT Newswires