Oil rises on bigger-than-expected draw in U.S. fuel stocks


TOKYO: Oil prices climbed on Thursday, reversing previous losses, as a bigger-than-expected draw in U.S. gasoline and distillate stocks prompted buying.

Prices were also buoyed by expectations that soaring natural gas prices as winter approaches will drive a switch to oil to meet heating demand.

Brent crude futures gained 52 cents, or 0.6%, to $83.70 a barrel at 0330 GMT after falling 0.3% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures climbed 52 cents, or 0.7%, to $80.96 a barrel, after dropping 0.3% the previous day.

"A larger-than-expected drop in the U.S. gasoline and distillate inventories led to fresh buying," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

The American Petroleum Institute (API) said on Wednesday U.S. crude stockpiles rose by 5.2 million barrels for the week ended Oct. 8, but gasoline inventories fell by 4.6 million barrels and distillate stocks fell by 2.7 million barrels, according to market sources who saw the API data.

Analysts in a Reuters poll expected crude inventories to rise by 0.7 million barrels, but gasoline stocks to drop by 0.1 million barrels and distillate to decline by 0.9 million barrels.

"With OPEC+ sticking to an existing pact for a gradual increase in oil output and some OPEC countries missing to reach their quota, supply will remain tight and oil prices will stay on a bullish trend at least until next OPEC+ meeting," Saito said.

The Organization of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+, earlier this month "reconfirmed the production adjustment plan", referring to a previously agreed deal under which 400,000 barrels per day (bpd) would be added in November.

Angola is likely to struggle to meet its OPEC output quota for at least two years, Finance Minister Vera Daves de Sousa told Reuters last month.

Oil prices were also supported by concerns about supply tightness after the U.S. Energy Information Administration (EIA) said on Wednesday that crude oil output in the United States, the world's biggest producer, is going to decline in 2021 more than previously forecast, though it will bounce back in 2022.

"Investors also bet that surging gas prices will encourage power generators to switch to oil as winter demand season is approaching," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

"The current tightness in the crude market and near-term outlook for seasonal demand increases lent support to investors' sentiment, outweighing weaker demand forecast by OPEC," Kikukawa said.

The OPEC trimmed its world oil demand growth forecast for 2021 in its latest monthly report on Wednesday, while maintaining its 2022 view.

However, the producer group said rising natural gas prices could boost demand for oil products as end users switch fuels.

The EIA will release its inventory report later on Thursday at 11 a.m. EDT (1500 GMT). - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Brent , WTI , distillate , OPEC+

   

Next In Business News

Myanmar, with US$6b in foreign reserves, is doing utmost to stabilise currency
Thailand approves US$1.64b more support measures
Edra wins bid to build 600MW power plant in Bangladesh
Malaysia's retirement scheme third in Asia
UK reveals US$13.3b of inward investment in green push
Bitcoin pushes toward record before debut of futures-based ETF
Hong Kong's new China futures create bourse history, but lag rival Singapore
Chinese property bonds firm after Kaisa and Sunac make coupon payments
CIDB hopes for funds to boost tech in construction
IOI Corp offers to buy debt notes

Others Also Read


Vouchers