Oil prices surged today as a larger than expected fall in US crude stocks gave fresh indications that fuel demand is beginning to increase as coronavirus restrictions begin to be rolled back around the world.
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Worldwide standard Brent Crude saw prices jump 4.2 per cent today, rising to $66.34. US counterpart West Texas Intermediate (WTI) did even better, picking up 4.5 per cent to hit $62.90.
The increases came as the Energy Information Administration (EIA) said that crude inventories fell by 5.9m barrels last week to 492.4m barrels.
Analysts at Reuters had predicted a drop of 2.9m barrels.
The bigger draw-down was due to increase refining activity, which analysts said was a positive sign that demand was returning.
“A big jump in refinery runs suggests strong refining demand,” 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 today the International Energy Agency (IEA) also raised its demand forecasts for 2021, further strengthening sentiment.
The Paris-based body said that oil demand would now grow by 5.7m barrels a day in 2021, with the rise mainly coming in the second half of the year.
“A year on from what the IEA called “Black April”, one of the darkest months ever for world oil markets, fundamentals look decidedly stronger”, the IEA said in its monthly report.
“The massive overhang in global oil inventories that built up during last year’s Covid-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing.”