Oil recovers on surprise US inventory draw

Oil prices saw a rebound on Thursday, with US crude and gasoline stocks witnessing a drawdown, according to Reuters.

This comes despite indications that the US Federal Reserve may maintain higher interest rates for an extended period of time.

Brent crude futures for May increased by 0.5 per cent, reaching $86.41 a barrel, following a 1.6 per cent drop on Wednesday. Similarly, US West Texas Intermediate futures for May rose by 0.5 per cent to $81.65 a barrel, after a 1.8 per cent decrease in the previous session.

The US Energy Information Administration reported a second consecutive week of declines in crude inventories in the United States, the world’s largest oil consumer.

Contrary to analysts’ expectations of a 13,000-barrel rise, stockpiles unexpectedly fell by 2 million barrels to 445 million barrels in the week ending March 15.

The decline in stockpiles, coupled with rising exports and increased refinery activity, suggests a steady demand for fuel.

However, the Fed’s decision to keep interest rates between 5.25 per cent and 5.5 per cent could imply higher borrowing costs over a longer period, potentially impacting future fuel demand.

Meanwhile, concerns persist about the impact of Ukrainian attacks on Russian refineries on global petroleum supplies.

The ongoing conflict has seen Ukraine target at least seven Russian refineries this month, disrupting around 7 per cent of Russia’s refining capacity.

Analysts warn that prolonged disruptions could force Russian producers to cut supply if exports and storage become problematic.”