Oil prices surged almost 5% on Wednesday, after a report from the International Energy Agency, followed by U.S. inventory data boosted optimism about returning demand after the coronavirus lockdowns last year crushed fuel consumption.
Brent crude futures rose $2.91, or 4.6%, to settle at $66.58 a barrel. U.S. West Texas Intermediate (WTI) crude ended $2.97, or 4.9%, higher at $63.15 a barrel.
U.S. crude inventories fell by 5.9 million barrels last week, the Energy Information Administration said, exceeding analysts' forecasts for a 2.9 million-barrel drop. East Coast crude stocks hit a record low. [EIA/S]
Gasoline supplied in latest week, indicating the U.S. consumption of the fuel, rose to 8.9 million barrels per day, the highest since August, the EIA report showed.
Gasoline stocks edged higher by 309,000 barrels, less than expectations for a 786,000-barrel rise. Distillate stockpiles fell by 2.1 million barrels in the week, versus expectations for a 971,000-barrel rise.
"All in all, it was a very supportive report," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "It really looks like we're getting a return to some more solid demand numbers and that should keep us going."
Earlier in the session, oil prices rose on a report from the International Energy Agency that predicted global oil demand and supply were set to rebalance in the second half of the year. It added that producers may then need to pump an additional 2 million bpd to meet the expected demand.
"That IEA report is one of the best ones we've seen them publish in awhile in terms of being optimistic about the continued rebound in demand," said John Kilduff, partner at Again Capital in New York.
Similarly, the Organization of the Petroleum Exporting Countries on Tuesday raised its global demand forecast by 70,000 bpd from last month's forecast and now expects global demand to rise by 5.95 million bpd in 2021.
Signs of a strong economic recovery in China and the United States have underpinned recent price gains, but stalled vaccine rollouts worldwide and soaring COVID-19 cases in India and Brazil have slowed the market's advance.