A stronger dollar and a hawkish Yellen were not enough to slow oil's rebound as more US states eased lockdowns and the European Union sought to attract more travellers, which would help offset weakened fuel demand in India as COVID-19 cases soar.
“Gasoline inventories in the U.S. are well below where they were a year ago and we’ve taken out refinery capacity,” said Peter McNally, global head for industrials, materials and energy at Third Bridge.
“We’ve seen the impact on demand as more people get vaccinated, so we’re going to get that tailwind plus seasonality coming later this month.”
While OPEC kept its crude production steady in April, ahead of a planned output hike this month, all eyes will be on signs of demand picking up in US crude stocks.
The last few weeks have seen very modest changes in crude stocks and analysts expected inventories to have fallen last week, and it did in a big way. Crude stocks fell 7.688mm barrels - the biggest weekly draw since January
Solid gains for WTI today left it hovering at the highs of the day around $65.75 ahead of the API print - its highest since mid-March - and extended gains above $66 after the data.
“The news from Europe on the outlook toward reopening is providing a good sense of optimism for global demand continuing to rise,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy.