Oil prices rose by more than 2 percent early on Thursday, with WTI Crude trading above $70 a barrel for the first time in a month, driven by bullish U.S. inventory and demand data and a weaker dollar.
As of 11:13 a.m. EDT on Thursday, the front-month WTI Crude contract was up by 2.71% at $70.44, trading above the $70 a barrel mark for the first time since August 3. Brent Crude had risen by 2.43% at $73.30.
Oil prices traded higher on Thursday, as a weakening U.S. dollar made crude buying cheaper for the holder of other currencies. It was not only the weaker greenback that pushed oil higher.
The EIA reported on Wednesday a major crude draw in U.S. inventories and a record implied American fuel demand. The Energy Information Administration reported inventories had declined by 7.2 million barrels in the week to August 27. This compared with a crude oil inventory draw of 3 million barrels estimated by the EIA for the previous week and analyst expectations for a draw of 2.83 million barrels.
"Implied demand is reported to have hit a record high of 22.8MMbbls/d over the week, eclipsing the previous record of 22.4MMbbls/d seen in 2018. This stronger implied demand number likely reflects some downstream inventory build ahead of Hurricane Ida," ING strategists Warren Patterson and Wenyu Yao said early on Thursday.
The OPEC+ decision from Wednesday to proceed with the plans to continue easing cuts by another 400,000 bpd in October also supported oil prices, despite lingering fears about the surge in COVID cases.
"Agreeing to another increase while the world is still battling various virus variants highlights the group's confidence in rising demand, but also that they see $70 as an acceptable price level for now," Saxo Bank said in a daily commentary today.
"In the US total oil products supplied, a proxy for demand, hit the highest level since at least 1990. Together with soaring gas prices leading to more fuel burns in Asia as well as production lost from hurricane Ida we believe prices may soon find support," the bank's strategy team added.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More