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UPDATE 5-Oil rises on economic recovery hopes, weaker dollar

reuters.com · 09/02/2021 00:33
UPDATE 5-Oil rises on economic recovery hopes, weaker dollar

Updates prices

By Bozorgmehr Sharafedin

- Oil prices rose more than $1 on Thursday, supported by optimism about the pace of the economic recovery from the pandemic, a sharp decline in U.S. crude stocks and a weaker dollar.

Brent crude LCOc1 was up $1.25, or 1.8%, at $72.84 a barrel by 1341 GMT and West Texas Intermediate (WTI) crude CLc1 rose $1.39, or 2%, to $69.98.

The number of Americans filing new claims for jobless benefits fell last week, while layoffs dropped to their lowest level in more than 24 years in August, suggesting the labour market was charging ahead even as new COVID-19 infections surge.nL1N2Q321Z

"Although oil is lagging equities, its downside is clearly limited by the general confidence surrounding the global economy despite consistent fears of the prolonged spread of the coronavirus," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

Meanwhile, India's gasoline demand is set to hit a record this fiscal year, with consumption accelerating as more people hit the road for business and leisure travel after easing of COVID-19 curbs. nL4N2PX2LK

In the United States, crude inventories dropped by 7.2 million barrels last week, the Energy Information Administration said on Wednesday. EIA/S

Hurricane Ida, meanwhile, has affected about 80% of the Gulf of Mexico's oil and gas output. Oil refineries in Louisiana could take weeks to restart. nL1N2Q32LUnL1N2Q32VB

"Crude oil processing will probably take considerably longer to recover from the outages than crude oil production, which suggests that crude oil stocks will increase in the coming weeks," said Commerzbank analyst Carsten Fritsch.

Optimistic about the global economic recovery, the Organization of the Petroleum Exporting Countries and allied producers including Russia, together known as OPEC+, has raised its demand forecast for 2022. nL1N2Q30F8nW1N2PA04Y

The group agreed on Wednesday to continue a policy of phasing out record production reductions by adding 400,000 barrels per day (bpd) to the market. nL1N2Q30F8

"What is not so certain ... is whether demand will be able to grow as quickly as OPEC+ and the market predicts," said Rystad Energy's head of oil markets, Bjornar Tonhaugen, citing the risk of further coronavirus lockdowns to counter new variants of the virus.


CHART: U.S. oil may retest support at $67.37nL1N2Q405H

CHART: Brent oil may retest support at $70.22nL1N2Q401W

(Reporting by Bozorgmehr Sharafedin in London
Additioanl reporting by Aaron Sheldrick
Editing by Mark Potter and David Evans)

((bozorgmehr.sharafedin@thomsonreuters.com; Twitter: @bozorgmehr;))