Crude oil prices rise as US fuel inventories fall

NEW YORK — Oil prices rose more than 2% on Wednesday, boosted by a huge drop in US fuel inventories and expectations that OPEC+ producers might decide against increasing output when they meet this week.

US gasoline stocks last week by the most on record and refining output fell to a record low in the wake of a deep freeze in Texas that shut production.

Gasoline inventories fell to 243.5 million barrels, the US Energy Information Administration (EIA) said, while distillate stockpiles fell by the most since 2003 to 143 million barrels.

“It was a giant storm,” Bob Yawger, director of energy futures at Mizuho, said of the Texas freeze. “It shut down every refinery in refinery row, basically, that mattered and it froze in production.”

Crude inventories rose by 21.6 million barrels, the most on record, to 484.6 million barrels, EIA said. Refining capacity use fell to just 56% of overall capacity, the lowest on record, as the US Gulf Coast’s refining capacity use plunged to 40.9%, the lowest ever.

Brent crude rose $1.37 or 2.2% to settle at $64.07 a barrel. US West Texas Intermediate (WTI) crude rose $1.53 or 2.6% to settle at $61.28 a barrel.

Earlier, oil prices jumped after Reuters, citing three sources, reported that the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and allies including Russia is considering rolling over production cuts from March into April rather than raising output.

The group had previously been widely expected to ease the production cuts on Thursday.

Kuwaiti Oil Minister Mohammad al-Fares said the market was being supported by optimism over vaccinations. OPEC expects global oil demand in 2021 to grow by 5.8 million barrels per day (bpd) to about 96 million bpd. That would still be lower than demand in 2019, which was about 100 million bpd.

Russia has been widely expected to push for more increases. But in February it failed to raise output despite being allowed to do so by OPEC+ as harsh winter weather hit output at mature fields.

Also positive for prices, US President Joseph R. Biden said the United States would have enough COVID-19 vaccines for every American adult by the end of May after Merck & Co. agreed to make rival Johnson & Johnson’s vaccine.

Mr. Biden said he hoped that the United States would be “back to normal” at this time next year and potentially sooner. —