MELBOURNE: prices rose on Thursday, extending strong gains overnight with fuel demand growing and crude stocks declining as production remains hampered in the U.S. Gulf of Mexico after two hurricanes.
The market was also supported by a broader switch back into risk assets as concerns eased over a potential default by huge property developer China Evergrande and the possible fallout on the world’s second-largest economy.
U.S. 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 17 cents, or 0.2%, to $76.36 a barrel.
Both benchmark contracts jumped 2.5% on Wednesday after data from the U.S. Energy Information Administration showed U.S. crude stocks fell by 3.5 million barrels to 414 million barrels in the week to Sept. 17, the lowest since October 2018, in a bigger drawdown than analysts had expected.
“Oil fundamentals remain constructive, particularly in the U.S.,” ING commodities strategists said in a note.
In a sign of strong fuel demand as travel bans ease, East Coast refinery utilisation rates rose to 93%, the highest rate since May 2019, EIA data showed.
ANZ Research said market sentiment is also being supported by surging natural gas prices.
“Supply shortage of gas could encourage power utilities to shift from gas to oil if winter turns out to be colder this year,” ANZ analysts said in a note.
The rise in oil prices came even as the U.S. dollar hit a one-month high after the U.S. Federal Reserve signalled rate hikes could come next year, more quickly than expected. Oil prices typically fall when the dollar rises as a stronger greenback makes oil more expensive for holders of other currencies.