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Oil futures rose Wednesday, hitting two-month highs, as traders appeared upbeat on the economic outlook on expectations the omicron wave of COVID-19 will have little lasting effect on demand.
West Texas Intermediate crude for February delivery
CL00,
CLG22,
rose 89 cents, or 1.1%, to $82.11 a barrel on the New York Mercantile Exchange, after trading at its highest intraday level since Nov. 11. March Brent crude
BRN00,
BRNH22,
the global benchmark, was up 60 cents, or 0.7%, at $84.32 a barrel on ICE Futures Europe, after trading at its highest since Nov. 10, according to FactSet.
Remarks Tuesday by Federal Reserve Chairman Jerome Powell, testifying at a Senate confirmation hearing, have contributed to the firm tone, analysts said. Powell, who is expected to win confirmation from the full Senate to serve a second term as Fed chief, described the effect of the omicron variant of the coronavirus on the U.S. economy as short-lived, while arguing the central bank’s plans to tighten monetary policy in an effort to rein in inflation won’t derail the economy.
“Participants on the oil market drew their own conclusions from [Powell’s testimony] and bought up oil forward contracts in anticipation of continued robust oil demand,” said Carsten Fritsch, analyst at Commerzbank, in a note.
“In addition, there was increased risk appetite, as reflected in rising stock markets,” he said. “By contrast, fundamental data are taking more of a back seat at present,” including figures from the American Petroleum Institute late Tuesday that showed a small fall in crude inventories but a large jump in gasoline supplies last week.
The API reportedly said domestic crude supplies fell by 1.1 million barrels for the week ended Jan. 7, while gasoline stockpiles saw a weekly increase of 10.9 million barrels and distillate supplies rose by about 3 million barrels.
More closely followed inventory data from the Energy Information Administration will be released Wednesday. On average, the EIA is expected to show crude inventories down by 1.6 million barrels, according to a survey of analysts conducted by S&P Global Platts. The survey also calls for weekly supply increases of 3 million barrels for gasoline and 2 million barrels for distillates.
