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UPDATE 6-Oil rises on economic recovery hopes, weaker dollar

reuters.com · 09/02/2021 00:33
UPDATE 6-Oil rises on economic recovery hopes, weaker dollar

New throughout, updates prices, market activity and comments; new byline, changes dateline, previous LONDON

By David Gaffen

- Oil prices rose more than $1 a barrel on Thursday, rebounding on optimism about the pace of global economic growth despite the coronavirus pandemic, as well as on a sharp decline in U.S. crude inventories.

Brent crude LCOc1 was up $1.78, or 2.5%, at $73.37 a barrel by 11:43 a.m. EDT (1543 GMT). West Texas Intermediate (WTI) crude CLc1 rose $1.92, or 2.8%, to $70.51.

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

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

On Wednesday, the group agreed to continue a policy of phasing out record production reductions by adding 400,000 barrels per day (bpd). It did not take up entreaties from the United States to accelerate removal of those supply curbs. nL1N2Q30F8

India's gasoline demand is set to hit a record this fiscal year as more people hit the road 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, which will sap crude demand, but that could be offset by slow ramp-up of production offshore due to damage to key support facilities. 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.

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

CHART: Brent oil may retest support at $70.22nL1N2Q401W

(Additional reporting by Bozorgmehr Sharafed in in London and Aaron Sheldrick; Editing by Mark Potter, David Evans and David Gregorio)

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