Oil hits fresh 2 year high, retreats from $72.83 pb mark

Oil prices slipped on Wednesday having earlier touched $72.83, their highest since May 20, 2019.

The price dip came after U.S. inventory data showed a surge in gasoline inventories due to weak fuel demand. This was reportedly caused by the U.S. Memorial Day weekend, traditionally the beginning of the peak summer driving season.

Brent crude futures fell 23 cents, or 0.3%, to $71.99 a barrel by 12:35 p.m. EDT(1635 GMT), having earlier touched $72.83, their highest since May 20, 2019.

U.S. West Texas Intermediate (WTI) crude fell 43 cents, or 0.6%, to $69.62 a barrel, after reaching $70.62, its highest since Oct. 17, 2018.

Despite a 5 million-barrel draw in crude oil last week, stocks of gasoline and other fuels rose sharply due to weak demand, according to Energy Information Administration data for the week.

The data included the long Memorial Day holiday weekend.

Product supplied fell to 17.7 million barrels per day, versus 19.1 million the week before.

“This could be canary in a coal mine at peak economic activity having occurred, but it’s early days to conclude that,” said John Kilduff, partner at Again Capital LLC in New York.

Other analysts noted, however, that the poor weather up and down the U.S. East Coast may have reduced consumption, following a period of gasoline hoarding that artificially boosted demand during the Colonial Pipeline outage last month from a ransomware attack.

On Tuesday, the EIA forecast U.S. fuel consumption would grow by 1.48 million bpd this year, up from a previous forecast of 1.39 million bpd.

Oil rallied earlier in the session on signs of strong fuel demand in western economies, while the prospect of Iranian supplies returning faded after the U.S. Secretary of State said sanctions against Tehran were unlikely to be lifted.

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