Oil Rises Amid Declining Crude Inventories, Demand Hopes on Relaunch and Vaccine Deployment

MELBOURNE (Reuters) – Oil rose at the start of trade on Wednesday over expectations that global oil stocks will fall back to more normal levels this year and as US lawmakers move closer to approval of the aid bill President Joe Biden’s $ 1.9 trillion COVID-19 without Republican backing.

U.S. West Texas Intermediate (WTI) crude futures rose 11 cents, or 0.2%, to $ 54.87 a barrel at 1.30 a.m. GMT, in a third straight day of gains. The benchmark index hit a one-year high of A $ 55.26 on Tuesday.

Brent futures rose 16 cents, or 0.3%, to $ 57.62 a barrel, in a fourth straight day of gains after hitting $ 58.05 on Tuesday, its highest in more than 11 month.

Analysts said the market was supported by the latest assessment from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, that oil stocks fall below average. over five years by June.

This showed that producers’ production cuts were successful in restoring market equilibrium.

“The strategy was very clear. OPEC and its allies have decided to strike a deal that would normalize global excess stocks through 2021 – well, they’re on the right track, ”said Lachlan Shaw, head of commodities research at the National Australia Bank.

OPEC + expects production cuts to keep the market in deficit throughout this year, peaking at 2 million barrels per day in May, although it has revised its outlook downward. growth in demand, a document seen by Reuters on Tuesday showed.

Further supporting the market, industry data after the market closed on Tuesday showed that US crude and gasoline inventories fell unexpectedly.

The American Petroleum Institute, an industry group, reported that U.S. crude oil inventories fell 4.3 million barrels in the week of January 29, compared to analysts’ expectations in a Reuters poll for a construction of 446,000. barrels.[API/S]

Gasoline inventories fell by 240,000 barrels, defying analysts’ expectations for a build of 1.1 million barrels, while inventories of distillates, which include fuel oil and jet fuel, fell 1.6 million. barrels, more draft than expected.

U.S. government data is due at 3:30 p.m. GMT by the Energy Information Administration.

Analysts said that while there are still short-term risks around demand due to the spread of COVID-19, vaccines are being rolled out successfully and are expected to lead to loosening of lockdowns and more great mobility of people.

“So I think it certainly bolsters demand hopes, as well as the impacts of the stimulus,” NAB’s Shaw said.