Crude futures settle higher and add gains on U.S. policy
Oil futures settled higher on Wednesday, changing course after the Biden administration said it would not call on U.S. producers to increase crude output, and that efforts to increase OPEC production were a longer-range plan.
The market was also bolstered by a government report showing U.S. crude supplies fell last week, shifting the spotlight away from production by the Organization of the Petroleum Exporting Countries.
Brent crude is up about 35% this year, supported by OPEC-led supply curbs, even after the global benchmark oil contract last week suffered the steepest weekly loss in four months on worries that travel restrictions to curb coronavirus infections would hit demand.
Brent settled up 81 cents, or 1.15%, at $71.44 a barrel, and continued to tick upward in thin volumes during post-settlement trade. The increase followed a 2.3% rally on Tuesday. Earlier in the session it dipped to a low of $69.07 a barrel.
U.S. West Texas Intermediate (WTI) settled up 96 cents, or 1.41%, at $69.25 a barrel, after a 2.7% jump on Tuesday.
Prices fell early in the session after the White House said in a statement that the Biden administration had urged OPEC and its partners to boost production.
Oil prices on Wednesday consolidated strong overnight gains as a bullish outlook for U.S. fuel demand outweighed concerns about mobility curbs in Asia with the spread of the highly infectious COVID-19 Delta variant.
Industry data showed U.S. crude oil and gasoline inventories fell last week, while the U.S. Energy Information Administration raised its forecast for fuel demand in 2021 and said consumption in May through July was higher than expected.
Data from the American Petroleum Institute showed U.S. crude stocks fell by 816,00 barrels and gasoline stocks fell by 1.1 million barrels in the week ended Aug. 6, according to two market sources. Both drawdowns were a bit smaller than analysts polled by Reuters had expected.
Weekly figures from the EIA are due on Wednesday.
The EIA’s monthly report showed that the need for supply from the Organization of the Petroleum Exporting Countries (OPEC) will exceed OPEC supply by 1 million barrels per day in the third quarter and by 300,000 bpd in the fourth quarter of 2021, CBA’s Dhar said.
Reference: CNBC, Reuters
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