MOSCOW (MRC) -- Oil prices rose around 2% on Thursday, as record US implied demand, falling crude stockpiles and an upbeat economic outlook from the Federal Reserve trumped fears of the Omicron coronavirus variant hurting global consumption, reported Reuters.
Crude and other risk assets such as equities also got a boost after the Fed gave an upbeat economic outlook, lifting investor spirits even as the US central bank flagged a long-awaited end to monetary stimulus.
"The market was fearful of what the Fed was going to do, and now that it's in the rearview and we know what we're dealing with, the market is rallying," said Phil Flynn, senior analyst price futures group in Chicago.
Brent crude oil rose USD1.14, or 1.5%, to settle at USD75.02 a barrel, while US West Texas Intermediate (WTI) crude rose USD1.51, or 2.1%, to settle at USD72.38 a barrel, a 2.13% gain.
Demand has been rising in 2021 after last year's collapse. On Wednesday, the US Energy Information Administration (EIA) said product supplied by refineries, a proxy for demand, surged in the latest week to 23.2 million barrels per day (bpd).
"These figures suggest a healthy economic backdrop," said Tamas Varga of oil broker PVM.
"Although the Fed's announcement triggered a jump in both oil and equity prices, the withdrawal of economic support together with the Omicron crisis are the two major headwinds the oil market is currently facing," he added.
Lending further price support, the EIA also reported that US crude stocks fell 4.6 million barrels, more than analysts had forecast.
In Saudi Arabia, crude oil exports in October rose for a sixth straight month to their highest since April 2020, the Joint Organisation Data Initiative (JODI) said on Thursday.
Limiting gains were worries about the virus and the prospect of a supply surplus next year, as flagged by the International Energy Agency in its monthly report this week.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.