Oil up on surprise draw on inventories

Oil was up on Thursday morning in Asia, with a surprise draw in US crude oil supplies tempering fears of an oversupply. Hopes for a return to pre-Covid-19 conditions and demand levels also continue to drive investor appetite.

Brent oil futures rose 0.56% to $48.80 by 12:21 AM ET (4:21 AM GMT) and WTI futures were up 0.44% to $45.91.

Data from the US Energy Information Administration showed a draw of 754,000 barrels for the week to Nov. 20. Gasoline stocks rose by 2.2 million barrels in the week to 230.2 million barrels, the EIA said, more than forecasts for a 614,000-barrel rise.

“It’s a supportive report, but not wildly bullish. If there’s any disappointment at all, it’s gasoline numbers,” Phil Flynn, senior analyst at Price Futures Group in Chicago, told Reuters.

“It shouldn’t be a total surprise because more people are staying at home,” he added, in reference to Thursday’s Thanksgiving holiday. Although President-elect Joe Biden is urging Americans to avoid big family gatherings, wear masks and maintain social distancing during the holiday as the number of Covid-19 continues to rise. However, it remains to be seen whether Americans will heed the warning.

Data from the American Petroleum Institute released a day earlier showed an 8-million-barrel build in supplies.

The price of oil continues to rise as markets look toward a return to global normality and demand rising back to the levels seen before the Covid-19 pandemic. With a number of Covid-19 vaccines now moving toward public release, there is strong optimism among investors that 2021 will see economic conditions that return oil demand to its usual levels.

The encouraging vaccine results are “pushing aside concerns of enduring containment measures and prompting some follow-through buying from the speculative community,” Citigroup (NYSE:C) Global Markets said in a note.

However, “a pullback cannot be ruled out amid less robust demand in the near term,” the note warned.

First published on Investing.com