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Oil prices gain after steep drop in U.S. crude inventories


Rabu, 05 Mei 2021 / 14:48 WIB
Oil prices gain after steep drop in U.S. crude inventories
ILUSTRASI. Oil prices rose for a third day after industry data indicated U.S. crude inventories fell much more than expected last week.

Sumber: Reuters | Editor: Wahyu T.Rahmawati

KONTAN.CO.ID - SINGAPORE. Oil prices rose for a third day on Wednesday after industry data indicated U.S. crude inventories fell much more than expected last week, reinforcing bullish views on fuel demand in the world's largest economy.

U.S. West Texas Intermediate (WTI) crude futures rose 43 cents, or 0.7%, to $66.12 a barrel at 0704 GMT. Prices climbed as to high as $66.58, the most since March 8.

Brent crude futures were up 49 cents, or 0.7%, at $69.37 a barrel after touching a more than seven-week high of $69.78 earlier in the session.

Both benchmark contracts rose nearly 2% on Tuesday.

The American Petroleum Institute (API) industry group reported crude stockpiles fell by 7.7 million barrels in the week ended April 30, according to two market sources. That was more than triple the drawdown expected by analysts polled by Reuters. Gasoline stockpiles fell by 5.3 million barrels.

"Crude oil prices appear to be supported by a large draw in crude and gasoline inventories, according to API figures," said Margaret Yang, a strategist at Singapore-based DailyFX.

"The energy demand outlook is brightened by eased lockdown measures in parts of the U.S. and UK, which helped to offset concerns over lower demand from India and Japan. The upcoming summer driving season may further boost fuel demand and support oil prices."

Read Also: South Korea says AstraZeneca, Pfizer Covid-19 vaccines 87% effective after first shot

Traders are awaiting data from the U.S. Energy Information Administration due at 10:30 a.m. EDT (1430 GMT) on Wednesday to see if official data shows such a large drawdown.

"If confirmed by the EIA, that would mark the largest weekly fall in the official data since late January," Commonwealth Bank analyst Vivek Dhar said in a note.

The rise in oil prices to nearly two-month highs has been supported by COVID-19 vaccine rollouts in the United States and Europe.

"The constant stream of reopening announcements in the U.S. and the anticipated rising consumption are supportive, as are indications from Europe and the UK that inbound tourism will soon reopen to vaccinated visitors," said Jeffrey Halley, senior Asia-Pacific market analyst for OANDA.

This has so far more than offset a drop in fuel demand in India, the world's third-largest oil consumer which is battling a surge in COVID-19 infections.

"However, if we were to eventually see a national lockdown imposed, this would likely hit sentiment," ING Economics analysts said of the situation in India.

Read Also: Indonesia's recession eases as government boosts spending, exports recover


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