LONDON—Oil rose more than $1 a barrel on Thursday, extending gains from the previous session, buoyed by improved risk appetite among investors as lower crude inventories and a rebound in gasoline demand in the United States supported prices.
Brent crude futures for September rose $1.65, or 1.55 percent, to $108.27 a barrel by 1034 GMT, after gaining $2.22 on Wednesday.
U.S. West Texas Intermediate crude (WTI) was at $99.29 a barrel, up $2.03, or 2.09 percent, after rising $2.28 in the previous session.
“Yesterday’s stock market rally after the Fed’s rate hike and the consequent easing of the dollar helped oil prices re-gain their footing,” Tamas Varga, analyst at PVM Oil Associates, said.
“The weekly EIA statistics also proved supportive. There were draws in major categories and products supplied.”
The U.S. Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point, in line with expectations, to cool inflation, while the dollar fell on hopes for a slower hiking path.
A weaker dollar makes oil, priced in the currency, cheaper for buyers in other countries to purchase.
U.S. crude oil stockpiles fell by 4.5 million barrels last week, against expectations for a 1 million-barrel drop, while U.S. gasoline demand rebounded by 8.5 percent week on week, data from the Energy Information Administration (EIA) showed.
“The U.S. consolidated its position as the world’s largest petroleum exporter,” Citi analysts said in a note, as combined gross exports of crude oil and refined products stood at a record 10.9 million barrels a day.
U.S. crude exports reached a record 4.5 million bpd as WTI traded at a steep discount to Brent. However, in a bullish signal, U.S. crude oil production growth could stall due to a lack of fracking equipment and crews, as well as capital constraints, executives said this week.
Prices found further support from the energy supply battle between the West and Russia.
Meanwhile, Russia has cut gas supplies via Nord Stream 1, its main gas link to Europe, to just 20 percent of capacity. That could lead to switching to crude from gas and prop up oil prices in the short term, analysts said.
“We increase our total estimates for additional oil demand from gas to oil switching by 700,000 bpd from October 2022 through March 2023,” JP Morgan analysts said in a note.
However, this could be offset by normalizing Libyan supply, leading to a largely balanced global oil market in the fourth quarter, followed by a 1 million bpd stockbuild in the first quarter of 2023, they added.
“We keep our price forecast unchanged and see global oil price in the low-$100s in 2H22 and high $90s in 2023,” the bank said.
