Oil prices pass $65 on rising gasoline demand, falling U.S. dollar
SINGAPORE (Bloomberg) --Oil rose as the dollar declined and a fall in U.S. gasoline inventories offered a signal of recovering consumption.
Futures in New York climbed above $65 a barrel, while the U.S. currency was trading lower. Gasoline inventories have declined more than 25 million barrels in the last two weeks, while a measure for consumption expanded last week to the highest level since November. Profit from producing the fuel has soared.
The appetite for Iranian oil has grown, meanwhile, with China boosting its purchases even as other nations wait for the easing of U.S. sanctions. Imports have surged so much this month that ports in Shandong province are seeing increased congestion, according to traders and analysts.
Oil’s rally of more than 30% so far this year has taken a breather in recent days. Still the market has been tightening amid output cuts from OPEC+ members and as the outlook for demand improves with the rollout of Covid-19 vaccines.
“The rise in oil prices today looks to come on the back of positive risk sentiment on global financial markets,” said Jens Pedersen, senior analyst at Danske Bank. “With the next OPEC+ meeting less than three weeks away there is a limit to how high prices can go due to the potential for OPEC+ to start normalizing output.”
Prices:
- West Texas Intermediate added 1.3% to reach $65.27 a barrel at 10:26 a.m. London time
- Brent for May settlement rose 1.3% to $68.81
U.S. gasoline stockpiles fell by almost 12 million barrels last week, according to the Energy Information Administration. Crude stockpiles rose by 13.8 million, taking gains over the past three weeks to almost 37 million following a cold blast that shuttered a number of refineries.
It’s possible that U.S. crude may have to trade at a bigger discount to the global Brent benchmark, according to consultant Energy Aspects. That comes as the Brent market faces headwinds form refinery maintenance and sharp cuts to Saudi OSPs, forcing U.S. crude to trade even lower in turn, the consultant said.
Other oil-market news:
- S&P Global Platts said it will delay a plan to overhaul the world’s most important oil price after drawing criticism from the market.
- After months of being battered by a demand-killing pandemic and then a rare Gulf Coast freeze, U.S. refiners are being greeted with the best margins on turning crude oil into gasoline and diesel since the summer of 2019.
