Oil extended gains on Wednesday during early Asian trading hours after an industry report pointed to another decline in U.S. crude stockpiles followed by OPEC raising its outlook for oil demand.
Brent crude futures rose 28 cents, or 0.4%, to $63.95 a barrel at 0057 GMT, after climbing 39 cents on Tuesday.
Oil prices have been on a gaining streak over the past week due to signs of a strong economic recovery in China and the United States. However, the gains have been capped by concerns over stalled vaccine rollouts worldwide and soaring COVID-19 infections in India and Brazil.
The American Petroleum Institute reported crude inventories fell by 3.61 million barrels last week compared with estimates for a decline of about 2.9 million barrels from analysts, which will be a third straight decrease if confirmed by government figures on Wednesday.
OPEC Forecast on oil Demand
The Organization of the Petroleum Exporting Countries (OPEC) has boosted its performance forecast for world oil demand growth this year on Tuesday now predicting demand to rise by 5.95 million barrels per day (BPD) 2021, up by 70,000 BPD from its forecast last month.
“It was a welcome prognosis by the market, which had been fretting about the impact the ongoing pandemic was having on demand,” ANZ Research Analysts.
Oil’s sizzling performance to the year slowed down in mid-March as some regions saw a resurgence in COVID-19 cases, raising concerns about near-term fuel demand. The Organization of Petroleum Exporting Countries said in its monthly report Tuesday that rising consumption should help to trim stockpiles even as OPEC+ readies to return more barrels to the market from May.
Market gains have been lowered on concerns about increased oil production in the United States and rising supply from Iran when OPEC and its allies, together called OPEC+, are set to bring on more supply from May.
EIA said this week oil output from seven major shale formations is expected to rise by 13,000 BPD in May to 7.61 million BPD.