MELBOURNE (Reuters) – Oil prices rose nearly 1% on Wednesday, extending gains overnight, after industry data estimated U.S. crude inventories fell much more than expected the week latest, reinforcing bullish views on fuel demand in the world’s largest economy.
U.S. West Texas Intermediate (WTI) crude futures jumped 60 cents, or 0.9%, to $ 66.29 a barrel at 1:30 a.m. GMT, after climbing to $ 66.45, its highest in March 8.
Brent futures jumped 58 cents, or 0.8%, to $ 69.46 a barrel after hitting a more than seven-week high of $ 69.64.
The two benchmark contracts rose nearly 2% on Tuesday ahead of data from the American Petroleum Institute industry group.
API figures showed crude inventories fell 7.7 million barrels in the week ended April 30, according to two market sources. This was more than triple the withdrawal expected by analysts polled by Reuters. [API/S]
“This should give new immediate upward momentum for the market,” ING Economics analysts said in a note.
Traders are awaiting data from the US Energy Information Administration at 10:30 a.m. EDT (14:30 GMT) on Wednesday to see if official data shows such a large pullback.
“If confirmed by the EIA, it would mark the biggest weekly drop in official data since late January,” Commonwealth Bank analyst Vivek Dhar said in a note.
The rise in oil prices to nearly two-month highs has been supported by the deployment of the COVID-19 vaccine in the United States and Europe, paving the way for the lifting of pandemic lockdowns and the resumption of air travel.
So far, this has more than offset a drop in fuel demand in India, which is battling a spike in infections.
“However, if we were to eventually see a national lockdown imposed, it would likely hurt sentiment,” ING analysts said of the situation in India.
Reporting by Sonali Paul; Editing by Jacqueline Wong