Oil prices rise on economic outlook, drawdown in fuel stocks

Source: Reuters

Crude oil prices rose on Thursday as vaccine rollouts bolstered the economic outlook and U.S. fuel stocks fell sharply, although gains were capped by a surge in crude oil inventories after last month’s Texas storm.

Brent crude oil futures for May rose 40 cents, or 0.6%, to $68.30 a barrel by 0105 GMT, while U.S. West Texas Intermediate crude for April was up 48 cents, or 0.7%, at $64.92.

“Gasoline stocks fell... (which) provided the bullish offset and eventually sent oil prices higher on the strong demand for end products, hence an economic recovery,” said Stephen Innes, Chief Global Markets Strategist at Axi.

“Given the powerful signals from the U.S. re-opening narrative, it still suggests that the path of least resistance for oil prices is higher.”

U.S. gasoline stocks fell by 11.9 million barrels in the week to March 5 to 231.6 million barrels, the Energy Information Administration (EIA) said, compared with expectations for a 3.5 million-barrel drop.

Crude inventories, however, rose by 13.8 million barrels in the week to March 5 to 498.4 million barrels, compared with analysts’ expectations in a Reuters poll for an 816,000-barrel rise, as the nation’s oil industry continued to feel the effects of a winter storm mid-February that stalled refining and forced production shut-ins in Texas.

Globally, stocks also remain ample with crude oil in storage at major land and sea hubs rising last week, according to analysts and ship trackers.

Meanwhile, the U.S. House of Representatives gave final approval on Wednesday to one of the largest economic stimulus measures in American history, a sweeping $1.9 trillion COVID-19 relief bill that gives President Joe Biden his first major victory in office.

Saudi Arabia’s foreign minister on Wednesday said the kingdom would take deterrent action to protect its oil facilities, following attacks by Yemen’s Iran-aligned Houthi movement on energy sites.