Oil up over huge draw in US crude supplies

Oil was up Wednesday morning in Asia over a record fall in US crude supplies and growing expectations that re-opening drives in the US and Europe will boost fuel demand. However, investors are also keeping an eye on ever-surging numbers of Covid-19 cases in parts of Asia.

Brent oil futures rose 2.68% to $69.37 by 12:24M ET (4:24 AM GMT), closing in on the $70 mark. WTI futures jumped 2.64% to $66.19.

US crude oil supply data from the American Petroleum Institute showed a draw of 7.688 million barrels for the week ended Apr. 30, in what is set to be the largest drop since late January 2021. The draw exceeded the 2.191-million-barrel draw in forecasts prepared by Investing.com and the 4.319-million-barrel build recorded during the previous week.

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

US President Joe Biden said on Tuesday that the US aims to vaccinate 70% of U.S. adults with at least one Covid-19 shot by the Independence Day holiday on Jul. 4. In the UK, Prime Minister Boris Johnson said the country is set to lift lockdown rules in seven weeks.

Investors are betting that the accelerating Covid-19 vaccination rate will help oil prices return to pre-Covid-19 conditions in key markets. The European Union plans to ease curbs for the upcoming peak summer travel season, while states around the New York region in the US will lift most of the Covid-19 capacity restrictions on businesses. G20, a group of the world’s top 20 major economies, plans to introduce so-called vaccine passports to boost travel and tourism.

However, India, the third-largest oil importer globally, topped 20.2 million Covid-19 cases by May 5, according to Johns Hopkins University data. Elsewhere in Asia, countries including Singapore, Vietnam and Seychelles, have recently reported increasing numbers of Covid-19 cases.

However, with crude oil a major part of the current strong appetite for commodities, some investors remain optimistic.

“The rally has some momentum behind it… the recovery was always going to be uneven and we are now starting to see more positive factors align, which is stoking hopes for an even stronger pick-up in demand in the medium term.” Daniel Hynes, senior commodities strategist at Australia and New Zealand Banking Group Ltd., told Bloomberg.

First published on Investing.com