Oil Holds Above $73 as Shrinking U.S. Stockpiles Tighten Market

  • Bloomberg
  • Commodities News
Oil Holds Above $73 as Shrinking U.S. Stockpiles Tighten Market
Credit: © Reuters.

(Bloomberg) -- Oil held above $73 a barrel as shrinking U.S. crude and fuel stockpiles added to bullish sentiment around the global demand recovery.

Futures in New York were steady after rising 0.3% on Wednesday. Gasoline inventories unexpectedly slipped last week, while crude stockpiles fell for a fifth week, the longest run since January. The declines add to a tightening market as North America, China and parts of Europe rebound from Covid-19.

The recovery has accelerated as vaccinations are rolled out worldwide, boosting fuel consumption and helping to drain stockpiles that were built up during the height of the pandemic. The OPEC+ alliance is scheduled to meet at the end of next week to discuss its production policy for August and some nations are considering backing an output increase.

The prompt timespread for Brent was 71 cents a barrel in backwardation -- a bullish structure where near-dated contracts are more expensive than later-dated ones. That compares with 85 cents at the start of the week.

See also: Dwindling U.S. Crude Hub Stocks Seen Falling to Historical Lows

U.S. crude stockpiles fell by 7.6 million barrels last week, while inventories at the storage hub of Cushing dropped for a second week, according to data from the Energy Information Administration on Wednesday. Gasoline supplies shrunk by 2.9 million barrels, compared with a forecast gain in a Bloomberg survey.

©2021 Bloomberg L.P.

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