Oil Steadies After Rallying to Highest Level Since October 2018

© Reuters.

(Bloomberg) — Oil steadied in Asia after closing at the highest level since October 2018 as an industry report pointing to a decline in stockpiles reinforced optimism over the demand recovery.

Futures in New York traded near $69 a barrel after adding almost 4% over the previous two sessions. The American Petroleum Institute reported inventories fell by 5.36 million barrels last week, according to people familiar. That would be the biggest draw in a month if confirmed by official data.

Oil is in “strong demand right now,” with economies around the world opening up, Daniel Yergin, vice chairman at consultant IHS Markit Ltd., told Bloomberg Television, predicting prices could rise as high as $80 a barrel.

Optimism around rising fuel demand is growing as the U.S., China and Europe rebound strongly from the pandemic, with upbeat comments from OPEC+ and the International Energy Agency this week adding to the positive outlook. The Covid-19 comeback across Asia and Latin America, however, is a reminder that the recovery is likely to be uneven and bumpy.

The prompt timespread for was 39 cents in backwardation — a bullish structure where near-dated prices are more expensive than later-dated ones. That compares with 14 cents a week earlier.

U.S. gasoline stockpiles rose by 2.51 million barrels last week, according to the API report. Distillate inventories — a category that includes diesel — also climbed. Government data due later Thursday is forecast to show nationwide crude stockpiles fell by 2.53 million barrels.

©2021 Bloomberg L.P.

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