Oil prices climbed Thursday and reversed previous losses as a larger-than-expected pull in US gasoline and distillate stockpiles encouraged buying.
The rise in prices is supported by the expectations that rising natural gas prices as the winter months approach will trigger the transition to oil to meet the heating demand.
Brent crude futures rose 52 cents, or 0.6%, to $83.70 a barrel at 0330 GMT, after falling 0.3% on Wednesday.
West Texas Intermediate (WTI) crude futures rose 52 cents, or 0.7%, to $80.96 after falling 0.3% the previous day.
A larger-than-expected decline in US gasoline and distillate stocks has led to new purchases, and prices are rising with increased demand.
U.S. crude inventories increased by 5.2 million barrels in the week ended Oct. 8, but gasoline stockpiles fell 4.6 million barrels and distillate stocks fell 2.7 million barrels, the American Petroleum Institute (API) said on Wednesday.
By the way, analysts had expected crude oil inventories to rise by 0.7 million barrels, but gasoline inventories to fall by 0.1 million barrels and distillate stocks to fall by 0.9 million barrels.
Earlier this month, the Organization of the Petroleum Exporting Countries, Russia and its allies reapproved their previously agreed production adjustment plan to add 400,000 barrels per day (bpd) in November.
With OPEC+ sticking to the current agreement for a gradual increase in oil production and some OPEC countries failing to reach their quotas, supply is expected to remain tight and oil prices are expected to remain on an upward trend, at least until the next OPEC+ meeting.
For example, it is said that Angola will have difficulty meeting the OPEC production quota for at least two years.
Oil prices were bolstered by concerns about tightness in supply, after the U.S. Energy Information Administration (EIA) said on Wednesday that crude oil production in the United States, the world’s largest producer, would fall more than previously predicted in 2021.
The EIA will release its inventory report at 1500 GMT on Thursday.
Investors claim that rising gas prices will encourage electricity producers to switch to oil as winter demand approaches.
While keeping its 2022 outlook, OPEC lowered its world oil demand growth forecast for 2021 in its latest monthly report on Wednesday. However, the producer group also said that rising natural gas prices could increase demand for petroleum products as users switch fuel.
Nevertheless, the current tightness in the crude oil market and the short-term outlook for seasonal demand increases support investor sentiment, contradicting OPEC’s weak demand forecast.
