Oil prices are up over 2.5% on Wednesday, buoyed by draws in U.S. inventories of crude, gasoline, and distillates. The news invigorated investors’ appetites for crude futures and crude oil ETFs, stoking hopes for some return in fuel demand.
U.S. benchmark, West Texas Intermediate (WTI) crude futures, rose $1.22, or 2.6%, to trade at $48.23 per barrel, while Brent crude futures added $1.28, or 2.56%, to trade at $51.36 per barrel.
Gasoline stocks also dropped by an unexpected 1.1 million barrels in the week to 237.8 million barrels, the EIA said, while distillate stockpiles declined by 2.3 million barrels in the week to 148.9 million barrels, also more than anticipated.
“Overall, what this report reflects is that we’re starting to see continued improvement in demand,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “It reflects that we’re seeing a market that’s getting more in balance.”
A drop in the U.S. dollar is also helping to bolster oil prices, as a weak dollar makes dollar-denominated commodities such as crude oil less costly to holders of other currencies.
Some analysts are expecting higher oil based on technical analysis factors as well.
“The main trend is up according to the daily swing chart. A trade through $49.43 will signal a resumption of the uptrend. The main trend will change to down on a move through $45.14,” wrote fxempire.com analyst James Hyerczyk.
Issues in Africa are also affecting the market, as Investors monitored Nigeria, where supply disruptions contributed to higher prices. Exxon Mobil Corp issued a force majeure on the Qua Iboe crude oil export terminal last week after a fire sieged the facility, hurting two workers.
Despite the move higher, crude markets are still leery about prospects for a full recovery of oil demand following news of a new highly contagious strain of the coronavirus in the U.K., which has resulted in a plethora of countries shuttering their borders and potentially stymying demand for fuel.
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