Crude rose on Wednesday following industry data revealed U.S. oil inventories decreased more than expected, and OPEC boosted its outlook for oil demand.
However, gains were capped by concerns regarding the COVID-19 and by increasing supplies of the energy resource.
Brent crude futures climbed 42 cents, or 0.6%, to $64.09 a barrel at 0421 GMT, after getting 39 cents on Tuesday.
U.S. West Texas Intermediate (WTI) crude futures totaled 40 cents, or 0.7%, to $60.58 a barrel, following Tuesday’s increase of 48 cents.
Indications of a robust economic recovery in China and the United States have underpinned current oil price gains. However, worries over delayed vaccine rollouts worldwide and rising coronavirus infections in India and Brazil have capped gains.
Continuing delays on vaccine rollouts and global cases nearing January’s peak is expected to hold a firm cap on crude’s ascent in the short term. Simultaneously, persistent enthusiasm over a U.S. recovery and the world is on the cusp of rising out of the coronavirus crisis is holding a floor, stated Vandana Hari, energy analyst at Vanda (NASDAQ: VNDA) Insights.
A weakening U.S. dollar also contributed a gentle upward push in recent days, but there’s been no major bullish force to free crude from its tight trading range, she said.
A weaker dollar, which hit three-week lows on Wednesday, makes crude purchases more affordable for countries using other currencies.
Oil output from seven major shale formations is supposed to rise
The Organization of the Petroleum Exporting Countries (OPEC) squeezed up its forecast on Tuesday for world oil demand increase this year, anticipating demand to grow by 5.95 million barrels per day (BPD) in 2021, up by 70,000 BPD from its estimate last month. It is trading on the epidemic to fall and travel curbs to be lifted.
It was a pleasant prognosis by the market, which had been worrying about the influence the ongoing epidemic had on-demand, ANZ Research analysts stated in a note.
Further boosting the market on Wednesday, sources told data from the American Petroleum Institute revealed crude stocks declined by 3.6 million barrels in the week finished April 9, compared with estimates for a decline of around 2.9 million barrels from analysts surveyed by Reuters.
Traders expect to see if official inventory data from the U.S. Energy Information Administration (EIA) on Wednesday match that look.
Market gains are being capped on worries regarding enhanced oil production in the United States and improving supply from Iran when OPEC and its partners are set to take on more collection from May.
EIA stated this week oil output from seven major shale formations is supposed to rise by 13,000 BPD in May to 7.61 million BPD.
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