Oil prices rose on Wednesday after a drop in U.S. crude inventories reinforced OPEC’s robust demand outlook, while the market awaited fresh updates on the Colonial Pipeline outage.
U.S. West Texas Intermediate (WTI) crude futures rose 29 cents, or 0.44%, to $65.57 a barrel at 0646 GMT, adding to a 36 cent rise on Tuesday.
Gasoline stations from Florida to Virginia began running out of fuel on Tuesday as drivers rushed to top up their tanks, and pump prices rocketed.
U.S. unleaded gasoline prices hit an average of $2.99 a gallon, the highest since November 2014, the American Automobile Association said.
“Oil markets maintained their wait-and-see approach to the noise and tail-chasing seen elsewhere overnight. The Colonial pipeline cyberattack saga is dragging on and is now causing material shortages in the Eastern United States.” Jeffrey Halley, OANDA senior market analyst.
Meanwhile, oil prices were supported by the latest outlook from the Organization of the Petroleum Exporting Countries (OPEC), which stuck to a forecast for a strong recovery in world oil demand in 2021, with growth in China and the United States outweigh the impact of the coronavirus crisis in India.
OPEC said it expects demand to rise by 5.95 million BPD this year, unchanged from its forecast last month. However, it cut its demand outlook for the second quarter by 300,000 BPD due to soaring COVID-19 infections in India.
“India is currently facing severe COVID-19-related challenges and will therefore face a negative impact on its recovery in the second quarter, but it is expected to continue improving its momentum again in the second half of 2021,” OPEC said in its monthly report.
According to two market sources, data from the American Petroleum Institute industry group showed U.S. crude oil stocks fell by 2.5 million barrels in the week to May 7, according to two market sources, slightly less than expected.