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23 February 2024

Oil rises on tight U.S. stocks as winter blast hits

By Reuters

oil prices climbed for a fourth straight day on Thursday with U.S. crude, heating oil and jet fuel stocks growing tighter just as a wintry blast hits the United States.

Brent crude futures gained 74 cents, or 0.9%, to trade at $82.94 at 0911 GMT, extending gains of around 2.7% from the previous session.

U.S. West Texas Intermediate (WTI) crude futures, hitting their highest since Dec. 5 earlier, were up 81 cents, or 1%, at $79.10 a barrel.

Both benchmark contracts jumped on Wednesday after government data showed U.S. crude inventories fell by much more than analysts had expected, posting a drop of 5.89 million barrels for the week ending on Dec. 16.

Distillate stocks, which include heating oil and jet fuel, also declined, going against expectations for a build, in what PVM analyst Stephen Brennock called "an overwhelmingly price-supportive stock report from the EIA".

The falling stockpiles come as demand for heating oil is set to soar with a powerful winter storm hitting the United States, with sub-zero wind chills expected as far south as Texas and record-breaking lows forecast for Florida and eastern states.

Jet fuel consumption is also expected to pick up with a post-COVID boom in travel for the end-of-year holiday season, although transport fuel demand might be reduced if the storm keeps people from travelling.

Demand worries, however, stemming from China's COVID-19 surge and fears of a global recession may keep oil futures in check.

China may be struggling to keep an accurate count of COVID infections as it experiences a big spike in cases, a senior World Health Organization official said on Wednesday, amid concerns about a lack of data from the country.