Oil Up from 2-Week High as USA Stockpiles Decline
(Bloomberg) -- Oil extended gains from a two-week high after U.S. crude and fuel stockpiles posted strong declines, signaling peak summer demand remains robust despite a resurgence of Covid-19.
Futures in New York rose toward $73 a barrel after climbing 1% on Wednesday. Crude inventories dropped more than expected last week to the lowest level since January 2020, while supplies of distillates -- a category that includes diesel -- slid the most since April, according to a government report.
Oil has whipsawed throughout July and is set for only the second monthly loss since October after the virus comeback coincided with an OPEC+ agreement to boost output from August. The fast-spreading delta variant has led to renewed restrictions in some regions and raised concerns about short-term demand, although there are expectations the market will continue to tighten.
“There appears to be quite a bit of hesitancy to push the market in either direction, leaving it in a holding pattern,” said Warren Patterson, the head of commodities strategy for ING Groep NV in Singapore. “There is still uncertainty over the demand picture, with Covid-19 cases continuing to tick higher.”
The prompt timespread for Brent was 89 cents a barrel in backwardation -- a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 64 cents a week earlier.
U.S. crude stockpiles shrunk by 4.09 million barrels last week, according to data from the Energy Information Administration, compared with a forecast in a Bloomberg survey for a 2.5-million barrel decline. Gasoline inventories also fell, dropping by 2.25 million barrels.
© 2021 Bloomberg L.P.
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