Oil Up on Lower U.S. Stocks, Firmer Demand
LONDON (Reuters) - Oil prices firmed on Wednesday on signs of improving demand and a drawdown in U.S. crude inventories, but worries over the economic fallout from the coronavirus pandemic and weak refining margins capped gains.
Brent crude futures were up $1.33, or 3.84%, at $35.98 per barrel at 1348 GMT.
U.S. West Texas Intermediate (WTI) July crude futures were up $1.17, or 3.66%, at $33.13 a barrel.
The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero.
U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed.
Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.
Official data from the Energy Information Administration (EIA) is due later on Wednesday.
"Fundamentals in the market are improving, thanks to supply cuts and recovering demand,” ING said in a note.
Easing of lockdown restrictions worldwide are boosting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far.
But weak crude refining profits persist, which could delay a recovery in oil demand.
Brent crude futures were up $1.33, or 3.84%, at $35.98 per barrel at 1348 GMT.
U.S. West Texas Intermediate (WTI) July crude futures were up $1.17, or 3.66%, at $33.13 a barrel.
The WTI June contract expired on Tuesday at $32.50 a barrel, up 2.1%, avoiding the chaos of last month’s May expiry, when prices sank well below zero.
U.S. crude inventories fell by 4.8 million barrels to 521.3 million barrels in the week to May 15, data from the American Petroleum Institute (API) showed.
Refinery runs rose by 229,000 barrels per day, the API said, indicating plants are trying to produce more fuel as the United States eases its lockdowns.
Official data from the Energy Information Administration (EIA) is due later on Wednesday.
"Fundamentals in the market are improving, thanks to supply cuts and recovering demand,” ING said in a note.
Easing of lockdown restrictions worldwide are boosting demand for fuels, while initial shipping data shows that compliance with oil production cuts from the Organization of the Petroleum Exporting Countries and its allies has been strong so far.
But weak crude refining profits persist, which could delay a recovery in oil demand.