Rise in global oil prices due to a larger than expected decline in US fuel inventories; Brent crude at $ 83.70 per barrel
Oil prices soared Thursday, reversing previous losses, as a larger than expected draw in US gasoline and distillate inventories prompted the purchase. Prices were also supported by expectations that soaring natural gas prices as winter approaches will result in a switch to fuel oil to meet heating demand.
Brent crude futures gained 52 cents, or 0.6%, to $ 83.70 a barrel at 03:30 GMT after falling 0.3% on Wednesday. US West Texas Intermediate (WTI) crude futures rose 52 cents, or 0.7%, to $ 80.96 a barrel, after falling 0.3% the day before.
“A larger than expected decline in gasoline and distillate inventories in the United States has led to further purchases,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
The American Petroleum Institute (API) said on Wednesday that U.S. crude inventories rose 5.2 million barrels for the week ending Oct. 8, but gasoline inventories fell 4.6 million barrels. barrels and distillate inventories of 2.7 million barrels, according to market sources who have seen the API data.
Analysts in a Reuters poll expected crude inventories to rise 0.7 million barrels, but gasoline inventories to drop 0.1 million barrels and distillates to drop 0.9 million barrels. “With OPEC + sticking to an existing pact for a gradual increase in oil production and some OPEC countries missing to meet their quota, supply will remain tight and oil prices will remain on an uptrend. at least until the next OPEC + meeting, “Saito said.
The Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC +, “reconfirmed the production adjustment plan” earlier this month, referring to a previously concluded deal under which 400,000 barrels per day (bpd) would be added in November.
Angola is likely to struggle to meet its OPEC production quota for at least two years, Finance Minister Vera Daves de Sousa told Reuters last month. Oil prices were also supported by concerns about tight supply after the United States’ Energy Information Administration (EIA) on Wednesday said that crude oil production in the United States, the largest producer global, was going to decline in 2021 more than expected, although this will rebound in 2022.
“Investors are also betting that soaring gas prices will encourage power producers to switch to oil as the winter demand season approaches,” said Hiroyuki Kikukawa, chief research officer at Nissan Securities. “The current tightening of the crude market and the near-term outlook for increased seasonal demand has supported investor sentiment, offsetting weaker demand expected by OPEC,” Kikukawa said.
OPEC downgraded its forecast for global oil demand growth for 2021 in its latest monthly report on Wednesday, while maintaining its 2022 vision. However, the producer group said rising gas prices natural gas could stimulate demand for petroleum products as end users switch fuels.
The EIA will release its inventory report later Thursday at 11:00 a.m. EDT (3:00 p.m. GMT).