Crude oil futures are extending their gains in the middle of the trading week after the US government reported a slightly less-than-expected drawdown in domestic inventories. Energy commodities are adding to their recent gains on optimism over the Omicron variant, as well as swelling global demand.
January West Texas Intermediate (WTI) crude oil futures rose $0.51, or 0.71%, to $72.56 per barrel at 16:43 GMT on Wednesday on the New York Mercantile Exchange. US crude prices are up nearly 11% over the last week, lifting their year-to-date jump to more than 50%.
Brent, the international benchmark for oil prices, topped the $76 mark midweek. February Brent crude futures tacked on $0.61, or 0.81%, to $76.05 a barrel on London’s ICE Futures exchange. Brent is also up about 10% over the last week, bringing its 2021 boost to 47%.
According to the US Energy Information Administration (EIA), domestic crude supplies dropped 910,000 barrels in the week ending November 26, below the market estimate of 1.237 million barrels.
Inventories at the Cushing, Oklahoma storage facility increased 1.159 million barrels, up from the 787,000-barrel build last week. Gasoline supplies surged 4.029 million barrels, while distillate stocks jumped 2.16 million barrels.
This comes soon after the EIA raised its demand forecast in its monthly Short-Term Energy Outlook (STEO). Analysts raised their projection for 2022 global crude demand by 200,000 bpd to 3.55 million bpd.
Overall, market analysts are beginning to abandon their fears over the latest COVID strain, says Phil Flynn, senior market analyst at The Price Futures Group, telling MarketWatch:
“Traders are starting to realize that omicron, though it may cause some slight demand destruction, is not going to be as deadly as feared.”
Pfizer and BioNTech sparked joy on global financial markets when it was confirmed that three vaccine shots could neutralize the variant.
In other industry news, a S&P Global Platts survey suggested that crude production from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, climbed by 500,000 barrels per day last month.
“The collective OPEC+ output of 41.71 million [barrels per day]was the group’s highest in 19 months, but still 4.15 million b/d below what it pumped in April 2020, when Saudi Arabia and Russia launched an oil price war,” the report noted.
Still, the figures are short of the group’s projections, and this could exacerbate the growing imbalance in global crude markets.
In other energy markets, January natural gas futures rallied $0.148, or 3.99%, to $3.856 per million British thermal units (btu). January gasoline futures picked up $0.0475, or 2.24%, to $2.1471 per gallon. January heating oil futures rose $0.0387, or 1.74%, to $2.2636 a gallon.