Oil rises for second day on improving signs of US refinery demand
Oil prices rose for a second day on Thursday, buoyed by expectations that demand in the US, the world’s biggest oil consumer, will improve as refineries try to return to service after outages and as the dollar weakened.
Brent crude futures rose 34 cents, or 0.4%, to $83.37 a barrel at 0740 GMT. US West Texas Intermediate crude futures climbed 37 cents, or 0.5%, to $78.28 a barrel.
“Oil prices have been resilient thus far, with market participants seemingly eyeing a retest of its year-to-date high following its rally in February,” said Yeap Jun Rong, market strategist at IG, adding that geopolitical tensions provided support.
“That said, gains could be somewhat contained for now, given the higher-than-expected inventories build in US crude stocks from the API figure overnight drove some wait-and-see for the EIA numbers to be released ahead,” Yeap added.
Crude stocks rose 7.17 million barrels in the week ended Feb. 16, market sources citing American Petroleum Institute figures said on Wednesday. Gasoline stockpiles also rose while distillate fuel inventories declined.
US crude inventories have climbed amid outages at large refineries that have left utilisation rates at the lowest level in two years, though the plants are resuming output.
BP’s 435,000 barrel-per-day (bpd) refinery in Indiana, the largest in the US Midwest, will return to full production in March, according to people familiar with plant operations, after a power outage from Feb. 1.
TotalEnergies’ 238,000-bpd refinery in Port Arthur, Texas, is also working to complete a restart, though it is still operating minimally following a weather-related power outage.
Analysts expect US refinery run rates to have risen to 81.5% last week from 80.6% of total capacity in the previous week, according to a Reuters poll.
Investors will keep an eye on the official inventory data from the US Energy Information Administration (EIA) that is due at 1600 GMT on Thursday, delayed one day by a US holiday. Crude was also supported by a weaker US dollar, which makes oil less expensive for traders holding other currencies.
The dollar index, which measures the greenback against six major peers, fell 0.3% to 103.713 at 0740 GMT.
“The retreat in the US dollar for the fourth straight session may also boost the short-term appeal for oil,” said Yeap.
Cash-strapped Sri Lanka said Wednesday it had exported tea worth $20 million to Iran to partially repay its $251 million oil debts, with Colombo saying Tehran’s visiting foreign minister had expressed “satisfaction” at the deal.
“So far $20 million worth of tea has been exported to Iran under the barter trade agreement,” Sri Lankan Prime Minister Dinesh Gunawardena’s office said in a statement after talks with Iranian Foreign Minister Hossein Amir-Abdollahian.
The tea-for-oil deal was agreed upon in December 2021, but exports were delayed by Colombo’s economic crisis that forced then-president Gotabaya Rajapaksa to step down in July 2022.
The barter deal allows sanctionshit Iran to avoid having to use up scarce hard currency to pay for imports of popular tea.
It also allowed Sri Lanka to pay with tea, as the country was short of foreign currency.
The island defaulted on its $46 billion foreign debt in April 2022 and secured a $2.9 billion IMF bailout early last year.
Ceylon tea, known by the island’s colonial-era name, made up nearly half of Iran’s consumption in 2016. However, the proportion has declined in recent years.