Oil up as falling US crude inventories signal concrete recovery in oil demand
Oil prices rose on Thursday as a bigger-than-expected drop in crude oil inventories in the United States, combined with the easing of restrictions in the country, signals a rebound in demand for oil.
International benchmark Brent was trading at $69.09 a barrel as of 0649 GMT for a 0.18% increase after closing at $68.96 a barrel on Thursday.
The US benchmark West Texas Intermediate (WTI) was at $66.12 a barrel at the same time for a 0.74% rise after ending the previous session at $65.63 a barrel.
Oil prices were supported by the narrowing gap between demand and supply with the larger than expected drop in US crude inventories last week, signaling a rebound in US crude demand, the largest consumer of oil in the world. The easing of coronavirus restrictions by major oil consuming countries has also helped.
U.S. commercial crude oil inventories fell 8 million barrels, or 1.6%, to 485.1 million barrels, compared to market expectations of a decline of 2.2 million barrels, the data showed. released Wednesday by the country’s Energy Information Administration (EIA).
OPEC+ producing countries began to bring additional supply to the market from early May, after expressing confidence in a recovery in oil demand in the second half of the year.
The group’s positive sentiments coincided with the gradual easing of pandemic mitigation measures in the United States and Europe, although the worrying rise in Asian countries, particularly India, continues to dampen demand.
Several US states, including New York, New Jersey and Connecticut, have announced a partial or complete lifting of restrictions, while European countries are also experiencing the phasing out of restrictions.
France is lifting internal travel restrictions while many countries, including Germany, Italy and Denmark, are set to ease restrictions for fully vaccinated people. In Ireland, restrictions will be gradually lifted until June 7 and the UK expects COVID-19 restrictions to be eased further on May 17.
Adding more to rising oil prices, militants on Wednesday attacked two oil wells in the Bai Hassan oilfield in northern Iraq’s Kirkuk province.
Some security personnel were killed and injured in the bombing, but the attack did not affect oil production.
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