Crude prices rose more than 2% on Wednesday after government data showed U.S. oil inventories fell across the board, bolstering hopes that fuel demand in the world’s biggest economy will withstand the coronavirus pandemic.
Brent crude LCOc1 settled up 93 cents, or 2.1%, at $45.43 a barrel. West Texas Intermediate CLc1 oil ended $1.06, or 2.6%, higher at $42.67 a barrel, having dropped 0.8% in the previous session.
U.S. crude oil, gasoline and distillate inventories fell last week as refiners ramped up production and demand improved, a government report showed.
U.S. fuel demand rose to 19.37 million barrels per day last week, the highest since March, data from the Energy Information Administration showed.
“We’re seeing the demand bounce back,” said Phil Flynn, senior energy analyst at Price Futures Group. “The market is tightening a lot quicker than people thought.”
Crude inventories USOILC=ECI fell by 4.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.9 million-barrel drop. Crude output dropped to 10.7 million bpd from 11 million bpd in the week, according to the report.
“The most surprising statistic was the decline in oil production by 300,000 barrels per day at the same time that we’ve been hearing producers talking about restoring production,” said Andrew Lipow, president of Lipow Oil Associates in Houston. “That’s going to give more support to crude oil prices for the balance of the year.”
The EIA’s downward revision on Tuesday to a key U.S. oil production forecast for this year also lent support to prices.
U.S. crude production is forecast to fall 990,000 bpd this year to 11.26 million bpd, steeper than the 600,000 bpd decline it forecast last month.
World oil demand will fall by 9.06 million bpd this year, the Organization of the Petroleum Exporting Countries said in a monthly report on Wednesday, more than the 8.95 million bpd decline expected a month ago.
Still, growing uncertainty over a stalemate in Washington in talks for a stimulus package to support recovery from the deepest impact of the pandemic may weigh on prices.
In India, refined fuels consumption fell to 15.68 million tonnes in July, down 11.7% year-on-year and 3.5% below June’s levels, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum & Natural Gas showed.