Oil prices rose on a weaker dollar as fears of rising U.S. inflation eased while a steep fall in U.S. fuel stocks meant a crude glut would be short-lived as refiners restart in Texas after last month’s freeze.
Brent crude oil futures for May rose $1.04, or 1.53%, to $68.94 a barrel by 1006 GMT, while U.S. West Texas Intermediate crude for April was up $1.02, or 1.58%, at $65.46.
“Fears of inflation are receding as the February U.S. CPI was at 1.7%. Consequently, bond yields fell and equities stabilized with the Dow hitting an all-time high. The dollar, therefore, is weakening, which helps oil,” Tamas Varga, senior analyst at PVM Oil Associates, said.
U.S. Treasury yields fell as concern about a strong pick-up in inflation eased and focus turned to an auction of 30-year government debt. The dollar is at its lowest level in a week.
Varga added that the massive draw on U.S. gasoline stocks has also helped to boost oil prices.
“(It) implies that refiners’ crude intake will keep growing, reversing the recent stock builds we have seen in the last three weeks due to Winter Storm Uri.”
U.S. gasoline stocks fell by 11.9 million barrels in the week to March 5 to 231.6 million barrels, the Energy Information Administration (EIA) said, compared with expectations for a 3.5 million-barrel drop.
Crude inventories, however, rose by 13.8 million barrels in the week to March 5 to 498.4 million barrels, compared with analysts’ expectations in a Reuters poll for an 816,000-barrel rise, as the nation’s oil industry continued to feel the effects of a winter storm mid-February that stalled refining and forced production shut-ins in Texas.
Globally, stocks also remain ample with crude oil in storage at major land and sea hubs rising last week, according to analysts and ship trackers.
As the pace of inoculations picks up, several states such as North Carolina and California have moved to relax COVID-19 restrictions.
Meanwhile, the U.S. House of Representatives gave final approval on Wednesday to one of the largest economic stimulus measures in American history, a sweeping $1.9 trillion COVID-19 relief bill that gives President Joe Biden his first major victory in office.
