Oil Prices Rise on Improving US Refinery Demand
Oil Prices See Second Day of Gains
Oil prices continued to climb for a second consecutive day on Thursday, driven by the anticipation of increased demand in the U.S., the world’s largest oil consumer. This surge in demand is expected as refineries work towards resuming operations after recent outages, coupled with the weakening of the dollar.
Price Movement and Market Sentiment
At 0740 GMT, Brent crude futures rose by 34 cents, or 0.4%, reaching $83.37 a barrel, while U.S. West Texas Intermediate crude futures saw an increase of 37 cents, or 0.5%, reaching $78.28 a barrel. Market strategist Yeap Jun Rong from IG noted that oil prices have displayed resilience, with the possibility of retesting the year-to-date high following the rally in February. Geopolitical tensions have also contributed to the positive sentiment in the market.
Impact of Inventory Data
However, the gains may be limited as the American Petroleum Institute reported a higher-than-expected build in crude stocks, with an increase of 7.17 million barrels in the week ended Feb. 16. This has prompted a wait-and-see approach for the release of the EIA inventory data. Gasoline stockpiles rose, while distillate fuel inventories declined.
Refinery Outages and Production Resumption
Large refineries in the U.S. have faced outages, resulting in a climb in crude inventories and a decrease in utilization rates. However, these plants are gradually resuming operations. BP’s refinery in Indiana and TotalEnergies’ refinery in Port Arthur, Texas, are both working on restoring full production after experiencing power outages.
Anticipated Increase in Refinery Run Rates
Analysts are expecting U.S. refinery run rates to have risen to 81.5% last week from 80.6% of total capacity in the previous week, according to a Reuters poll. The official inventory data from the U.S. Energy Information Administration (EIA) is due at 1600 GMT on Thursday.
Impact of Weaker US Dollar
The weaker U.S. dollar has also contributed to the support for crude prices, making oil less expensive for traders holding other currencies. The dollar, which measures the greenback against six major peers, fell 0.3% to 103.713 at 0740 GMT.
