Oil inventories are beginning to fall in some regions as demand outpaces supply constrained by deep production cuts from OPEC leader Saudi Arabia, providing support for prices which are expected to rise in coming months. JP Morgan analysts said this month that oil inventories — which include crude and fuel products — now play a bigger role in determining oil prices than the U.S. dollar because Western sanctions on Russia have accelerated oil trading in other currencies.
"We expect stocks to draw relatively aggressively in July, and by the end of August, we should be through the stock builds that we saw in the first half of the year," said Christopher Haines, an analyst at Energy Aspects.
"We are on the cusp of supply tightness. Saudi cuts are essentially accelerating the timeline."