Oil prices rose for a third day on Wednesday after industry data showed that US oil inventories fell much more than expected last week, bolstering optimistic outlooks on fuel demand in the world’s largest economy.
WTI (West Texas, US) crude oil futures were up 43 cents, or 0.7%, to $ 66.12 a barrel at 07:04 GMT. Prices rose to $ 66.58, the highest since March 8.
Brent crude futures rose 49 cents, or 0.7%, to $ 69.37 a barrel after hitting more than a seven-week high of $ 69.78 earlier in the session.
Both benchmark contracts were up nearly 2% on Tuesday.
The American Petroleum Institute (API) industry group said crude oil inventories fell 7.7 million barrels in the week ending April 30, according to two market sources. This is more than triple the expectations of analysts surveyed by Reuters. Gasoline stocks fell by 5.3 million barrels.
“According to the API, oil prices appear to be supported by significant reductions in oil and gasoline inventories,” said Margaret Young, a strategist at Singapore-based DailyFX.
“The outlook for energy demand is boosted by easing isolation measures in parts of the US and UK, which have helped allay fears of declining demand from India and Japan. The upcoming summer season of increased fuel demand may further increase fuel demand and support oil prices. ”
Traders are awaiting data from the US Energy Information Administration on Wednesday at 10:30 am ET (14:30 GMT) to see if the official data shows such a large drawdown.
“If confirmed by the EIA, this will be the biggest weekly drop in official data since the end of January,” Vivek Dhar, an analyst at Commonwealth Bank, said in a note.
The rise in oil prices to nearly two-month highs was supported by the deployment of the COVID-19 vaccine in the US and Europe.
“The steady stream of reopening announcements in the US and expected growth in consumption are encouraging, as is data from Europe and the UK that inbound tourism will soon reopen to vaccinated visitors,” said Jeffrey Halley, Senior Asia Pacific Market Analyst at OANDA …
This has far more than offset the drop in fuel demand in India, the world’s third-largest oil consumer, which is struggling with a surge in COVID-19 infections.
“However, if we end up seeing the introduction of national isolation, it is likely to hit the sentiment,” analysts say ING Economics of the situation in India.
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