Oil futures rose for a third straight day Wednesday, with Brent crude, the global benchmark, trading near the $70-a-barrel threshold on expectations for higher energy demand as the European and U.S. economies reopen, while weekly industry data showed a large drawdown in American crude and fuel inventories.
West Texas Intermediate crude for June delivery
was up 72 cents, or 1%, at $69.60 a barrel on ICE Futures Europe after trading at a session high of $66.88. Brent last traded above $70 on March 15, according to FactSet.
“Clearly, the market is focusing more on re-openings, rather than the latest COVID-19 wave from the world’s third-largest oil consumer, India,” said Warren Patterson, head of commodities strategy at ING, in a note titled, “Reopening Euphoria.”
“Part of the reason for this is the fact that the Indian government appears reluctant to impose a national lockdown, despite calls for one. However, if we were to eventually see a national lockdown imposed, this would likely hit sentiment,” he said.
Several U.S. states have scrapped or plan to ease lockdown restrictions in coming weeks as COVID infection rates decline. Improved vaccine rollouts and easing restrictions on travel have also contributed to optimism over European fuel demand.
India’s hospitals remain overwhelmed by cases and lacking in supplies including oxygen.
Meanwhile, the American Petroleum Institute reported late Tuesday that U.S. crude supplies fell by 7.7 million barrels for the week ended April 30, according to sources. The data also reportedly showed gasoline stockpiles down by 5.3 million barrels, while distillate inventories declined by nearly 3.5 million barrels.
Crude stocks at Cushing, Oklahoma, the delivery hub for Nymex futures, meanwhile, edged up by 548,000 barrels for the week, sources said.
More closely followed inventory data from the Energy Information Administration will be released Wednesday. On average, the EIA is expected to show crude inventories down by 3.9 million barrels, according to a survey of analysts conducted by S&P Global Platts. It also forecast supply declines of 500,000 barrels for gasoline and 1.6 million barrels for distillates.