By David Gaffen NEW YORK (Reuters) – Oil prices rose on Wednesday following unexpected drawdowns in U.S. crude and fuel stocks, and as the U.S. dollar pulled back from recent gains, boosting commodities prices. Brent crude futures were up $2.82, or 3.3%, at $89.09 per barrel by 12:31 p.m. EST (1631 GMT). U.S. West Texas […]
Oil prices rise on surprise drop in U.S. crude, fuel stocks; dollar weakness
By David Gaffen
NEW YORK (Reuters) – Oil prices rose on Wednesday following unexpected drawdowns in U.S. crude and fuel stocks, and as the U.S. dollar pulled back from recent gains, boosting commodities prices.
Brent crude futures were up $2.82, or 3.3%, at $89.09 per barrel by 12:31 p.m. EST (1631 GMT). U.S. West Texas Intermediate (WTI) crude futures rose $3.20, or 4.1%, to $81.70 a barrel.
The dollar hit a fresh two-decade peak against a basket of currencies on Wednesday before pulling back. A strong dollar reduces demand for oil by making it more expensive for buyers using other currencies. In early afternoon U.S. hours, the dollar index was down 0.9%.
“These are all dollar-driven rallies across the board,” said Eli Tesfaye, senior market strategist at RJO Futures. “All raw material dominated currencies are up – crude is not just moving in isolation here.”
U.S. crude stocks fell by 215,000 barrels in the most recent week, while gasoline inventories declined by 2.4 million barrels and distillate inventories by 2.9 million barrels, as refining activity declined following several outages. [EIA/S]
Product supplied rose in the most recent week, as demand rebounded after some weeks of softness. Refining activity dipped, but refiners are still running at 90.6% of overall capacity in the United States, the highest for this time of year since 2014, on both domestic and export demand.
“If we can hang on to these gains, it will look like the market has seen a little bit of a bottom here,” said Phil Flynn, analyst at Price Futures Group.
In the Gulf of Mexico, about 190,000 barrels per day of oil production, or 11% of the Gulf’s total, was shut-in due to Hurricane Ian, according to U.S. government figures. Wholesale gasoline prices have been on the rise in the United States as well after refiners in the Midwest and West Coast shut.
Goldman Sachs cut its 2023 oil price forecast on Tuesday, due to expectations of weaker demand and a stronger U.S. dollar but said global supply disappointments only reinforced its long-term bullish outlook.
Global equities pulled off two-year lows on Wednesday, after the Bank of England said it would step into the bond market to stem a damaging rise in borrowing costs, thereby dampening investor fears of contagion across the financial system.
(Reporting by David Gaffen; additional reporting by Shadia Nasralla in London; Editing by Lisa Shumaker and David Gregorio)