LONDON: Oil prices rose on Thursday, boosted by a strong outlook for demand in the United States after fuel inventories fell more than expected, and a weaker US dollar.
Brent crude futures rose 43 cents, or 0.6 percent, to stand at $71.21 a barrel by 7:23 a.m. Saudi time, their highest level since March 3. US West Texas Intermediate crude gained 38 cents, or 0.6 percent, to $67.54.
US government data showed a higher-than-expected drawdown last week in distillate inventories, including diesel and heating oil, which fell by 2.8 million barrels, outstripping a drop of 300,000 barrels expected in a Reuters poll.
“US oil demand outlook remains healthy despite lower air travel passenger volumes,” JP Morgan analysts said in a note, adding that reduced US travel activity did not signal broader weakness in demand outlook.
Global oil demand averaged 101.8 million barrels per day, an annual increase of 1.5 million bpd, the analysts said.
US crude inventories, rose 1.7 million barrels, however, exceeding expectations for an increase of 512,000 barrels in an earlier Reuters poll.
A weaker greenback also contributed to oil gains, with the dollar on a downtrend since the end of February.
“Throughout the week, the weakness of the dollar appeared to provide some support for dollar-denominated oil prices,” said Phillip Nova senior market analyst Priyanka Sachdeva.
Oil investors stay hopeful of the prospect of the Federal Reserve easing interest rates by 50 basis points by year’s end, she added.
Global risk premiums rose after Israel launched a new ground operation on Wednesday in Gaza after breaking a ceasefire of nearly two months.
The US kept up airstrikes on Houthi targets in Yemen in retaliation for the group’s attacks on ships in the Red Sea. President Donald Trump has also vowed to hold Iran responsible for future Houthi attacks.
On Wednesday, Ukrainian President Volodymyr Zelensky said a halt to strikes on energy facilities in the war with Russia could come quickly, suggesting both sides were moving closer to a ceasefire that could lead to the easing of sanctions and the return of Russian supply to the market.
Trump’s Middle East envoy, Steve Witkoff, has said another round of talks will be held in Saudi Arabia on Sunday by Russian and US officials aiming to halt the war.
