Oil Up as Report Points to Shrinking USA Stockpiles
(Bloomberg) -- Oil resumed gains after an industry report pointed to a decline in U.S. fuel and crude stockpiles, adding to signs of a tightening market.
Futures in New York rose 0.8% to trade above $72 a barrel after slipping for a second session on Tuesday. The American Petroleum Institute reported gasoline inventories slid by 6.23 million barrels last week, according to people familiar with the figures. That would be the biggest draw in motor fuel stockpiles since March if confirmed by government data later Wednesday.
Global inventories are expected to tighten through the rest of the year as key energy consumers continue to rebound from the pandemic, although the latest Covid-19 resurgence is raising concerns about the short-term demand outlook. The fast-spreading delta variant has led to renewed restrictions in some regions, with oil set for only the second monthly loss since October.
Delta has presented a challenge to refiners that are making some of the best profits in years. Processors want to cash in, but are wary that renewed demand weakness could lead to bloated stockpiles and squeeze margins again.
“The biggest risk to oil prices is still the delta variant, with many countries still coming to terms with their outbreaks,” said Suvro Sarkar, energy sector lead for group research at DBS Bank Ltd. in Singapore. “U.S. and Europe demand should continue to support prices for the moment.”
The prompt timespread for Brent was 96 cents a barrel in backwardation -- a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 60 cents a week earlier.
U.S. crude inventories fell by 4.73 million barrels last week, the API said. That would be the ninth draw in 10 weeks if confirmed by the Energy Information Administration Administration on Wednesday. Stockpiles will drop by 2.5 million barrels, a Bloomberg survey shows.
© 2021 Bloomberg L.P.
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