Oil rises for second day on hope of improving US demand

Singapore — Oil prices rose for a second day on Thursday on the expectation that demand in the US, the world’s biggest oil consumer, will improve as refineries try to return to service after outages and as the dollar weakened.

Brent crude futures rose 17c, or 0.2%, to $83.20 a barrel at 5.10am GMT. US West Texas Intermediate (WTI) crude futures for April climbed 19c, or 0.2%, to $78.10 a barrel. Oil prices rose 1% on Wednesday.

“Oil prices have been resilient thus far, with market participants seemingly eyeing a retest of its year-to-date high following its rally in February,” said Yeap Jun Rong, market strategist at IG, adding that geopolitical tension provided support.

“That said, gains could be somewhat contained for now, given the higher-than-expected inventories build in US crude stocks from the API figure overnight drove some wait-and-see for the EIA numbers to be released ahead,” Yeap added.

Crude stocks rose 7.17-million barrels in the week ended February 16, market sources citing American Petroleum Institute (API) figures said on Wednesday. Petrol stockpiles also rose while distillate fuel inventories declined.

US crude inventories have climbed amid outages at large refineries that have left utilisation rates at the lowest level in two years, though the plants are resuming output.

BP’s 435,000 barrel-a-day (bbl/day) refinery in Indiana, the largest in the US Midwest, will return to full production in March, according to people familiar with plant operations, after a power outage from February 1.

TotalEnergies’ 238,000 barrel-a-day refinery in Port Arthur, Texas, is also working to complete a restart, though it is still operating minimally following a weather-related power outage.

Analysts expect US refinery run rates to have risen to 81.5% last week from 80.6% of total capacity in the previous week, according to a Reuters poll.

Investors will keep an eye on the official inventory data from the US Energy Information Administration that is due at 4pm GMT on Thursday, delayed one day by a US holiday.

Crude was also supported by a weaker dollar, which makes oil less expensive for traders holding other currencies.

The dollar index, which measures the greenback against six major peers, fell to 103.905 at 5.10am GMT.

“The retreat in the US dollar for the fourth straight session may also boost the short-term appeal for oil,” said Yeap.

Reuters