Oil climbs amid tight supply and renewed risk appetite
By Sonali Paul
MELBOURNE (Reuters) – Oil prices rose Thursday, extending strong overnight gains as fuel demand soars and crude inventories shrink as production remains hampered in the U.S. Gulf of Mexico after two hurricanes.
The market was also supported by a broader return to risky assets as concerns eased over a potential default by huge real estate developer China Evergrande and the possible fallout on the world’s second-largest economy.
US West Texas Intermediate (WTI) crude futures rose 13 cents, or 0.2%, to $ 72.36 a barrel at 0143 GMT, while Brent crude futures rose by 17 cents, or 0.2%, to $ 76.36 a barrel.
The two benchmark contracts jumped 2.5% on Wednesday after US Energy Information Administration data showed US crude inventories fell 3.5 million barrels to 414 million barrels during the week to September 17, the lowest since October 2018, in a larger drop than analysts’. expected. [EIA/S]
“Oil fundamentals remain constructive, particularly in the United States,” ING commodities strategists said in a note.
Sign of strong fuel demand as travel bans ease, east coast refinery utilization rates hit 93%, the highest rate since May 2019, according to EIA data .
ANZ Research said market sentiment was also supported by the surge in natural gas prices.
“The shortage of gas supply could encourage electric utilities to switch from gas to oil if the winter turns colder this year,” ANZ analysts said in a note.
The rise in oil prices came even as the US dollar hit a one-month high after the US Federal Reserve signaled rate hikes could come next year, faster than expected. Oil prices generally fall when the dollar rises, because a stronger greenback makes oil more expensive for holders of other currencies.
(Reporting by Sonali Paul; editing by Richard Pullin)