Oil climbs 4% despite rise in US inventories

Reuters
New York, United States Published: Jul 21, 2021, 11:05 PM(IST)

A 3D printed oil pump jack is seen in front of displayed Opec logo in this illustration picture, April 14, 2020. (File Photo) Photograph:( Reuters )

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Following a deal between OPEC and its allies, known as OPEC+, oil futures are rebounding after falling around 7 per cent on Monday

Oil prices rose more than 4 per cent Wednesday, extending gains from the previous session as improved risk appetite provided support despite data showing an unexpected rise in US oil inventories.

Brent crude futures rose $2.93, or 4.2 per cent, to $72.28 a barrel by 12:06 p.m. EDT (1606 GMT). US West Texas Intermediate (WTI) crude futures rose $3.16, or 4.7 per cent, to $70.36 a barrel, a 4.7 per cent gain.

Also read | Major oil producers agree on modest output boost from August

Futures are rebounding after dropping around 7 per cent on Monday, following a deal by the Organization of Petroleum Exporting Countries and allies, together known as OPEC+, to boost supply by 400,000 barrels per day from August through December.

The sell-off was exacerbated by fears that a rise in cases of the Delta variant of the coronavirus in major markets like the United States, Britain and Japan would affect demand.

The price gains on Wednesday also come despite a rise in US crude stockpiles for the first time since May. Crude inventories rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, US Energy Information Administration data showed. Analysts had expected a 4.5 million-barrel drop.

Also read | OPEC+ plans new output policy meeting on Sunday, sources say

Still, gasoline and distillate inventories posted draws of 121,000 barrels and 1.3 million barrels, respectively.

"That crude oil build was obviously a surprise driven by a surge in imports and a plunge in exports," said John Kilduff, partner at Again Capital in New York. "The only positive aspects of the report remain strong gasoline demand and a rebound in distillate fuels."

JPMorgan analysts said global demand is expected to average 99.6 million barrels per day in August, up by 5.4 mbd from April. But they also said: "We only see 4Q21 demand recovering another incremental 330,000 vs a normalised 2019 baseline as colder weather sets in for the northern hemisphere and peak travel season is behind us."

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