2 weeks ago
Commodities

Oil Prices Press Higher on Steady U.S. Demand, OPEC Supply Cuts

Investing.com - Oil prices headed higher on Thursday as analysts downplayed the chance of demand faltering in the U.S. despite

Investing.com - Oil prices headed higher on Thursday as analysts downplayed the chance of demand faltering in the U.S. despite a large build in stockpiles.

New York-traded West Texas Intermediate crude futures rose 65 cents, or 1.16%, at $56.87 a barrel by 8:38 AM ET (13:38 GMT).

Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded up 73 cents, or 1.11%, to $66.72.

Although Wednesday’s data on U.S. stockpiles showed a surge in inventories last week, the jump was attributed to seasonality rather than a sign of weakness in demand.

Transversal Consulting president Ellen Wald explained that the build in crude oil stores was “seasonally appropriate” and that the data also showed a draw in gasoline stores of 4.2 million barrels.

“The key element to take away from the EIA report is that the large build in crude oil stocks is not indicative of faltering demand for oil in the U.S. or globally. Gasoline demand is still strong, and jet fuel demand is only slightly lower,” she said.

Backing the narrative that demand remains solid, Ole Hansen, head of commodity strategy at SaxoBank, pointed to the fact that the 7 million barrel jump in stockpiles was driven by a 1.6 million barrel rebound in net imports. “Crude oil imports from U.S. main suppliers all rose last week,” he noted.

Oil has rallied more than 20% this year on the back of production cuts of 1.2 million barrels per day from OPEC and its partners, most notably Russia.

Reuters quoted sources this week that said OPEC is likely to push back to its June meeting a decision on whether or not to extend those cuts, giving itself more time to asses progress in market rebalancing. It had originally intended to decide in April

U.S. sanctions against OPEC members Venezuela and Iran have also helped curb supplies.

Venezuela's state-run oil firm PDVSA this week declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil amid the sanctions.

With regard to sanctions on Iran, countries that were granted waivers on oil imports are scrambling to extend them beyond May, when Washington intends to let them expire.

Among those, India is seeking to keep imports of Iranian oil at the current level of about 300,000 barrels per day (bpd), according to a Reuters report on Thursday.

In other energy trading, gasoline futures gained 1.38% to $1.8137 a gallon by 8:41 AM ET (13:41 GMT), while heating oil rose 0.60% to $2.0282 a gallon.

Lastly, natural gas futures declined 0.46% to $2.828 per million British thermal unit.