Oil prices on track for near 2-year high on upbeat demand outlook

Oil prices jumped on Wednesday, putting Brent on track for its highest close in almost two years on signs of a speedy economic recovery and upbeat forecasts for energy demand.

Brent futures rose $1.12, or 1.6 percent, to $69.67 a barrel by 10:44 a.m. EDT (1444 GMT), while U.S. West Texas Intermediate (WTI) crude rose $1.10, or 1.7 percent, to $66.38.

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Gains soon after the release of the weekly inventory data put WTI on course for its highest close since October 29, 2018 and Brent for its highest close since May 28, 2019.

Those price gains came despite a smaller than expected US weekly crude inventory draw and a surprise increase in the gasoline stockpile.

“At this time of year we should be burning through a lot of gasoline andthat’s not what this report is showing,” Bob Yawger, director of energy futures at Mizuho, said, noting he did not “think there’s a skew to the data due to the Colonial (pipeline) outage.”

The US Energy Information Administration (EIA) said crude inventories declined 0.4 million barrels last week versus an expected 2.8 million barrel draw. Gasoline inventories, meanwhile, rose by a surprise 0.4 million barrels versus an expected 0.6 million barrel decline.

“Oil prices today are experiencing a lift on positive demand outlooks released by OPEC and IEA, which both came out with a similar consensus that oil demand will average 96.4 million barrels per day (bpd) in 2021,” said Louise Dickson, oil markets analyst at Rystad Energy.

The International Energy Agency (IEA) said in its monthly report that oil demand is already outstripping supply and the shortfall is expected to widen even if Iran boosts exports.

Oil prices were also buoyed by the outlook from the Organization of the Petroleum Exporting Countries, which on Tuesday stuck to a forecast for a strong recovery in world oil demand in 2021, with growth in China and the United States outweighing the impact of the coronavirus crisis in
India.

India’s coronavirus death toll crossed 250,000 in the deadliest 24 hours since the pandemic began.

Read more: IEA sees oil demand recovery outpacing growth in supply