TOKYO (Reuters) – Oil prices spiked Wednesday, with U.S. crude rising for a seventh day, after an industry report showed a further decline in inventories and investors shrugged as pandemic developments worsened .
US West Texas Intermediate (WTI) was up 40 cents, or 0.8%, to $ 53.61 a barrel by 0128 GMT, after gaining nearly 2% on Tuesday. Brent crude rose 47 cents, or 0.8%, to $ 57.05, after rising 1.7% in the previous session.
Both benchmarks have been trading at their highest since February, before the coronavirus outbreak in China began to spread around the world and billions of people went into lockdown to prevent a pandemic that is now in a deadly second wave.
Prices are shaking off the latest developments in Europe and the United States, where the death toll and new infections continue to rise, with the focus on vaccine launches, however fragmented, but the risks to the market remain.
“The response of US shale producers to the oil rally represents the most significant short-term supply risk for oil,” said Stephen Innes, chief global market strategist at Axi.
Declining inventories and rising oil prices are likely to cause US drillers to get back into the fray, especially as Saudi Arabia and other major producers have cut their production, effectively ceding market share to American producers.
U.S. crude oil inventories fell by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed up late Tuesday.[API/S]
This was more than analysts’ expectations in a Reuters poll for a drop of 2.3 million barrels.
Reporting by Aaron Sheldrick; edited by Richard Pullin