Oil prices headed higher on Thursday, boosted by tightening supplies and strong demand. Brent crude futures hovered near the $80 per barrel mark, giving traders a keen interest as to if and when this key level will be breached. Brent crude futures were trading at $79.44 per barrel as of 2:00 p.m. HK/SIN, up 0.20 percent in the session. U.S. WTI futures were also up, gaining 0.36 percent to trade at $71.75 per barrel.
U.S. crude inventories declined by 1.4 million barrels last week, bringing the country’s supplies to 432.34 million barrels. Demand tends to increase during the summer, especially in the United States as vacation season encourages long distance driving.
Morgan Stanley has raised its Brent price forecast to $90 per barrel by 2020 though some analysts question whether the market will tighten that much as a weaker dollar could send oil prices lower. Increasing production in the U.S. could also prevent price increases. The International Energy Agency (IEA) announced on Wednesday that it has reduced its growth forecast for this year to 1.4 million barrels per day, from 1.5 million barrels per day.
Dollar Rises on Italy’s Woes
The U.S. dollar also flirted with 5-month highs against the euro as political uncertainty in Italy weighed on the common currency. Reports out of Italy show that the country’s anti-establishment 5-Star Movement and the anti-immigrant League may request a 250-billion euro debt forgiveness from the European Central Bank. The euro could face additional selloffs as traders try to distance themselves from the political uncertainty. Still, despite the parties’ growing popularity, it remains unlikely that Italy will attempt to withdraw from the European Union as it sees how complicated the Brexit has been.
The euro was trading at $1.1817 in the mid-afternoon in Asia, near 5-month lows but up slightly on the day. The euro also gained against the yen, trading at 130.45, though it declined slightly against the pound to 0.8717.