Oil up over draw in US crude inventories

Oil was up Wednesday morning in Asia after data showed a larger-than-expected draw in US crude supplies and the Organization of the Petroleum Exporting Countries (OPEC) remained to be optimistic about the outlook for fuel demand.

Brent oil futures inched up 0.09% to $68.61 by 13:09 AM ET (5:09 AM GMT) and WTI futures edged up 0.18% to $65.40.

Tuesday’s US crude oil supply data from the American Petroleum Institute showed a draw of 2.533 million barrels for the week ending May 7. Forecasts prepared by Investing.com predicted a 2.250-million-barrel draw, while a 7.688-million-barrel draw was recorded during the previous week.

Investors now await crude oil supply data from the US Energy Information Administration, due later in the day.

The draw came before the closure of Colonial Pipeline’s networks after a cyberattack during the previous week. The operator is hoping to re-open a large part of the network by the end of the week.

On the demand side, OPEC continued to expect a strong fuel demand recovery in 2021 as China and the US continue their economic recoveries from Covid-19.

“Crude oil gained as investors continue to bet on a bright outlook for demand. A weak dollar also lent support,” ANZ Research analysts said in a note.

The cartel maintained its forecast of an increase of 5.95 million barrels per day (bpd) but cut its demand expectations for the second quarter by 300,000 as the number of Covid-19 cases continues to surge in India, the third-largest oil importer globally.

“India is currently facing severe Covid-19-related challenges and will therefore face a negative impact on its recovery in the second quarter, but it is expected to continue improving its momentum again in the second half of 2021,” OPEC said in its monthly report.

First published on Investing.com