While top Wall Street traders predicted a rise in prices and industry data predicted a draw in the U.S. stockpiled crude supply, Brent closed at $75 a barrel, and West Texas Intermediate rose to its highest level since 2018 amidst movements in U.S. oil markets.

Last week, U.S. oil inventories had the largest reported drop we have seen since January of this year. In fact, the American Petroleum Institute has indicated that U.S. crude oil inventories fell 8.54 million barrels over the past 7 days. Noteworthy is the fact that the inventory levels of both gas and distillates increased.

Due to the businesses in many U.S. cities that are finally reopening, people going back to work, and expedited vaccine programs, the value, and demand for oil should see a big boost. This increase in demand across the U.S. and the world have industry leaders cautious but optimistic as they see further gains in oil. But while oil prices have been rising for the past 30 days due to the end of the pandemic and increased consumption, economists predict a supply deficit for the remainder of this year, with prices peaking around $80 a barrel by December 2021.

The pricing structure of the market does indeed indicate just how dependent the price of oil is on Federal policies and consumption though. The prices seen for oil with immediate upcoming dates are being shown as much higher in price than those with dates in the near future. This is a prime example of backwardation, which is the result of a current higher demand for an asset than the contracts maturing in the future will yield.

With several large, heavily populated states like California and New York opening and lifting many anti-virus precautions, the recent numbers are encouraging. The U.S. oil and gas professionals, however, are concerned about the risks involved with the delta variant of the Covid-19 virus and what will happen this fall and winter. They are currently hesitantly optimistic that the market, economy, and openings will stay steady.

Virus aside, oil industry experts indicate that they feel that the most recent increase in the price of oil is due to an announcement of an important Federal Reserve policy expected to be made public this week. This announcement could potentially change interest rates or bring talks about the scaling back of bond purchases. When interest rates and bond purchases are discussed, the value of the U.S. dollar and oil is affected.