Oil Prices Rise by 1% and Hit a Seven-Week High

Oil prices rose for the third consecutive day on Wednesday after industry data showed that U.S. crude oil inventories fell far more than expected last week. It is strengthening the bullish view of fuel demand in the world’s largest economy.

At 0704 GMT, U.S. West Texas Intermediate crude oil futures rose 43 cents, or 0.7%, to $66.12 per barrel. The price climbed to $66.58, the highest since March 8.

Brent crude oil futures rose 49 cents, or 0.7%, to US$69.37 per barrel, after hitting a more than the seven-week high of US$69.78 earlier in the session.

Both benchmark contracts rose nearly 2% on Tuesday.

According to two market sources, the American Petroleum Institute industry organization reported that crude oil inventories fell by 7.7 million barrels in the week ending April 30. It is more than three times the shrinkage predicted by analysts surveyed by Reuters. Gasoline inventories fell by 5.3 million barrels.

What’s the Outlook for The Future Oil Demand?

The outlook for energy demand is lightened by loosened lockdown measures in parts of the U.S. and the United Kingdom. This helps offset concerns about falling demand in India and Japan. The upcoming summer driving season may further stimulate fuel demand and support oil prices.

In the U.S. and Europe, the COVID-19 vaccine launch has supported the rise of oil prices to highs in the past two months.

So far, this has been enough to offset the decline in fuel demand in India. India is the world’s third-largest oil consumer and is fighting a surge in COVID-19 infections.

The viewpoint may be uncertain, but the current trend is undoubtedly a sign of increasing oil demand. OPEC+ continues to limit production. For example, in the prominent U.S. oil market, commercial crude oil inventories eventually fell back to the five-year average, at 493 million barrels.

The virus explosion in India will not prevent oil prices from recovering. However, the recovery will likely start slowly in the second half of this year or even the following year.

If this is the case, then it is a long time for OPEC+ members to continue their production restrictions.