NEW YORK: Crude prices rose more than 1% on Wednesday, after US distillate inventories posted a large drawdown and refiners ramped up activity to the highest in over a year, boosting hopes for rising fuel demand in the world’s top oil consumer.
OPEC+, comprising of the Organization of the Petroleum Exporting Countries and its allies, on Tuesday decided to stick to plans for a phased easing of oil production restrictions from May to July, an indication that the group is confident that global demand will recovery.
“The market is supported by the general belief that the COVID endgame is in sight,” said Tamas Varga, analyst at PVM Oil associates.
Brent crude futures gained 85 cents, or 1.3%, to settle at $67.27 a barrel. US West Texas Intermediate (WTI) crude futures rose 92 cents, or 1.5%, to settle at $63.86 a barrel. US crude inventories rose by 90,000 barrels last week, the Energy Information Administration said, much smaller than analysts’ forecasts for a 659,000-barrel build.
Distillate stockpiles, which include heating oil and diesel fuel, fell by 3.3 million barrels in the week, and refining rates rose to 85.4% of capacity, their highest since March 2020. “Between planting season and online truck deliveries, you have a nice number in the diesel,” said Bob Yawger, director of energy futures at Mizuho. In a report by OPEC+ experts earlier in the week, the group forecast global oil demand in 2021 would grow by 6 million barrels per day, after demand plunged by 9.5 million bpd last year amid the pandemic. US bank Goldman Sachs said it expected the biggest jump in oil demand in history at 5.2 million bpd over the next six months, as vaccination campaigns accelerate in Europe and travel demand climbs.