Oil rallies amid surging US fuel demand and debt ceiling stand-off
A drop in US gasoline inventories coupled with a hoped-for resolution to the debt ceiling crisis propels an optimistic outlook for oil futures
11 May 2023 - 11:25
by Agency Staff
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London — Oil prices rose on Thursday, clawing back some of the previous day’s losses, supported by fuel demand data from the US, the world’s top oil consumer.
Brent crude rose 52c, or 0.7%, to $76.93 a barrel by 8.28am GMT, while US crude futures gained 48c, up 0.7%, to $73.04.
A sharper-than-expected drop in US gasoline inventories boosted prices, reflecting stronger demand for transport fuels.
US gasoline inventories fell by 3.2-million barrels last week, more than the 1.2-million barrel draw forecast by analysts, data from the US Energy Information Administration (EIA) showed.
Distillate stocks also declined, while US jet fuel demand rose to its highest since December 2019.
Meanwhile, investors are also awaiting news from talks on raising the US government’s $31.4-trillion debt ceiling, which kicked off on Wednesday, with Republicans continuing to insist on spending cuts.
The stand-off sent the cost of insuring exposure to US government debt to record highs as Wall Street grows more concerned about the risk of an unprecedented default.
“Once a compromise is reached ... investors will be encouraged to act and stocks will probably rally, providing invaluable support for oil,” said PVM analyst Tamas Varga.
On Wednesday US data showed a crucial inflation measure monitored by the Federal Reserve eased somewhat, potentially providing cover for the central bank to pause further increases to interest rates next month. Higher rates can weigh on oil demand.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil rallies amid surging US fuel demand and debt ceiling stand-off
A drop in US gasoline inventories coupled with a hoped-for resolution to the debt ceiling crisis propels an optimistic outlook for oil futures
London — Oil prices rose on Thursday, clawing back some of the previous day’s losses, supported by fuel demand data from the US, the world’s top oil consumer.
Brent crude rose 52c, or 0.7%, to $76.93 a barrel by 8.28am GMT, while US crude futures gained 48c, up 0.7%, to $73.04.
A sharper-than-expected drop in US gasoline inventories boosted prices, reflecting stronger demand for transport fuels.
US gasoline inventories fell by 3.2-million barrels last week, more than the 1.2-million barrel draw forecast by analysts, data from the US Energy Information Administration (EIA) showed.
Distillate stocks also declined, while US jet fuel demand rose to its highest since December 2019.
Meanwhile, investors are also awaiting news from talks on raising the US government’s $31.4-trillion debt ceiling, which kicked off on Wednesday, with Republicans continuing to insist on spending cuts.
The stand-off sent the cost of insuring exposure to US government debt to record highs as Wall Street grows more concerned about the risk of an unprecedented default.
“Once a compromise is reached ... investors will be encouraged to act and stocks will probably rally, providing invaluable support for oil,” said PVM analyst Tamas Varga.
On Wednesday US data showed a crucial inflation measure monitored by the Federal Reserve eased somewhat, potentially providing cover for the central bank to pause further increases to interest rates next month. Higher rates can weigh on oil demand.
Reuters
Oil prices dip as markets await US inflation data
Oil slips on surprise rise in US stocks
Oil prices ease in cautious trade
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