The price for Brent crude oil topped $124 per barrel on Thursday, with the potential for even higher prices thanks to steady U.S. demand. ICE Brent crude futures for June were up by $0.22 per barrel to $124.07 in morning European trading; the U.S. oil benchmark garnered an increase of $0.48 to $111.93 by the same time.
Reuters reported that U.S. crude and product inventories both dropped on Wednesday, implying that prices were not yet high enough to affect consumption patterns. Christophe Barret, oil analyst at Credit Agricole, was quoted in the report saying, "The data from the U.S. was supportive since we have no indication of falling demand. High prices aren't yet taking their toll."
Just a few more dollars, however, will bring the price to oils 32-month high of $127 per barrel; this level is said by consumer country reps to push demand down. Nobuo Tanaka, executive director of the International Energy Agency, said on Wednesday that demand was already lower, and that OPEC should boost output by June to put a cap on price increases.
OPEC, apparently, has other ideas; Ecuador's oil minister said there were no plans for an emergency meeting. Neither are there plans for an increase in output, it seems, because OPEC believes the current level is sufficient in spite of the situation in Libya.
U.S. gasoline stocks were down for the ninth straight week, by 1.58 million barrels, and distillate stocks were depleted by 2.5 million barrels as well. While analysts polled by Reuters expected a build in crude stocks of 1.1 million barrels, instead crude supplies took them by surprise, dropping by 2.32 million barrels. A Barclays analyst in a research note said, "The overhang of U.S. crude and oil product inventories ... is now at its lowest level since the end of 2008. Cushioning inventories have fallen and we continue to see WTI as being underpriced relative to Brent."