Oil Rises on Tight US Stocks as Winter Blast Hits

Oil Rises on Tight US Stocks as Winter Blast Hits
Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang Province, China, on Dec. 7, 2018. (Stringer/Reuters)
Reuters
12/22/2022
Updated:
12/22/2022

LONDON—Oil prices climbed for a fourth straight day and hit their highest in two and a half weeks on Thursday with U.S. crude, heating oil, and jet fuel stocks growing tighter just as a wintry blast hits the United States.

Brent crude futures gained $1.17, or 1.4 percent, to trade at $83.37 at 1235 GMT, extending gains of around 2.7 percent from the previous session.

U.S. West Texas Intermediate (WTI) crude futures were up $1.11, or 1.4 percent, at $79.40 a barrel.

Both benchmark contracts jumped on Wednesday after government data showed U.S. crude inventories fell by much more than analysts had expected, posting a drop of 5.89 million barrels for the week ending on Dec. 16.

Distillate stocks, which include heating oil and jet fuel, also declined, going against expectations for a build, in what PVM analyst Stephen Brennock called “an overwhelmingly price-supportive stock report from the EIA.”

The falling stockpiles come as demand for heating oil is set to soar with a powerful winter storm hitting the United States, with sub-zero wind chills expected as far south as Texas and record-breaking lows forecast for Florida and eastern states.

Jet fuel consumption is also expected to pick up with a post-COVID boom in travel for the end-of-year holiday season, although transport fuel demand might be reduced if the storm keeps people from traveling.

Demand worries, however, stemming from China’s COVID-19 surge and fears of a global recession may keep oil futures in check.

China may be struggling to keep an accurate count of COVID-19 infections as it experiences a big spike in cases, a senior World Health Organization official said on Wednesday, amid concerns about a lack of data from the country.

By Shadia Nasralla