The West Texas Intermediate (WTI) for August delivery gained 1.84 U.S. dollars, or 2.52 percent, to settle at 74.83 U.S. dollars a barrel on the New York Mercantile Exchange. Brent crude for September delivery increased 1.71 U.S. dollars, or 2.20 percent, to settle at 79.40 U.S. dollars a barrel on the London ICE Futures Exchange.
"We expect the production cuts and rising demand to increase prices going forward," with Brent crude oil spot prices to rise to 81 U.S. dollars per barrel by the end of this year and average 84 U.S. dollars per barrel next year, according to a monthly short-term energy outlook report issued by the U.S. Energy Information Administration (EIA) on Tuesday.
The EIA report assumed that the U.S. economy will grow 1.5 percent in 2023 and 1.3 percent in 2024, respectively, higher than the forecast of 1.3 percent for 2023 and 1 percent for 2024 in the previous report.
U.S. commercial crude oil and gasoline inventories dropped by 1 million barrels and 1.1 million barrels last week, respectively, according to a survey conducted by S&P Global Commodity Insights.
Crude prices are getting a boost as expectations grow for the oil market to remain tight despite all lingering growth concerns, said Edward Moya, senior market analyst at OANDA, a supplier of online multi-asset trading services.
WTI crude has a solid floor in place and it will take a lot to go wrong for oil prices to lose their footing, according to Moya.
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