On Wednesday, crude prices continued ascending for a third session to settle by increasing more than 1% following the US fuel demand data that was at the highest level since the start of the coronavirus pandemic.
Brent crude jumped by 1.7% or USD1.20 to settle at USD72.25/barrel. US WTI rose by 1.2% or 82 cents to close at USD68.36/barrel.
US gasoline futures surged by 5.5% to settle at USD2.3008/gallon but during the session, it hit the highest level since August 12 at USD2.3026/gallon.
The gain came following Mexican output slumped by more than 400,000 bpd due to an oil platform fire on Sunday.
The four-week average for US total product supplied skyrocketed to almost 21 million bpd, the highest since March 2020.
Refiners operating rate touched the highest level since late June at 92.4%, lessening US crude inventories to the lowest level since January 2020. In the week ended August 20, US crude stocks dipped to the lowest since January 2020 by 3 million barrels to 432.6 million barrels.
Gasoline stockpiles dropped by 2.2 million barrels, deeper than expectations for a 1.6 million barrel fall. Economist Matt Smith of ClipperData predicted that gasoline inventories have drawn as implied demand has rebounded, likely the last during the summer driving season.
From China, one of the world’s biggest crude consumers, there is a sign that the coronavirus Delta variant was easing. However, in most parts of the world, the pandemic is still raging and oil demand is still at risk. Sydney just recorded a daily high of infection on Wednesday despite two months of lockdown.
Going forward, Mark Haefele of UBS Global Wealth Management commented, "While volatility looks set to continue, we see further gains for oil as global economic normalization continues and OPEC remains disciplined on crude supplies.”
By December, UBS estimated Brent to hit USD75/barrel.
