Oil rose to the highest in a week alongside a broad market rally, drawing support from signs that OPEC+ may delay a planned output increase as well as expectations for a drop in U.S. crude supplies. U.S. benchmark crude futures extended gains after posting a 2.3% gain on the day after the industry-funded American Petroleum Institute was said to report an over 8-million-barrel decline in crude stockpiles last week. The market also took its cue from stronger equities as millions of Americans headed to vote on election day, while a weakening dollar helped boost the appeal for commodities priced in the currency.
“They can’t afford to let prices slip beyond where they were here recently,” said Josh Graves, senior market strategist at RJ O’Brien & Associates LLC. Meanwhile, “there’s still a lot of optimism that oil in the long-term will be OK, so traders are looking at buying any kind of significant dip in the market.”
Americans are voting in a presidential election that could reshape U.S. policy on a slew of energy-related areas such as fracking and how to address climate change. Meanwhile, a rising coronavirus case count in Europe is raising new threats to oil’s spotty demand recovery, with Italy and Sweden laying out new curbs. Demand is recovering “at a very slow speed,” according to the Organization of Petroleum Exporting Countries’ Secretary-General Mohammad Barkindo.
The API report also showed a 577,000-barrel decline in distillate stockpiles, while gasoline supplies rose by 2.45 million barrels last week. Inventories at the storage hub in Cushing, Oklahoma, also rose last week, the report said.
“It’s a big crude draw and not an obnoxious gasoline build,” said Tom Finlon of GF International. “We’re still continuing to chip away at what had been a glut. Distillate inventories are clearly going in the right direction.”
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