Oil Up, U.S. Crude Oil Supplies Drop to Lowest Level Since January 2020

Oil was up Thursday morning in Asia as the latest data showed a draw in U.S. crude oil supplies to their lowest level since January 2020.

Brent oil futures were up 0.34% to $74.12 by 11:43 PM ET (3:43 AM GMT) and WTI futures gained 0.37% to $72.66. Brent and WTI futures both remained above the $70 mark.

Wednesday’s U.S. Energy Information Administration (EIA) data showed a draw of 4.089 million barrels in the week to July 23. Forecasts prepared by Investing.com predicted a 2.928-million-barrel draw, while a 2.108-million-barrel build was recorded during the previous week.

Crude oil supply data released a day before by the American Petroleum Institute showed a draw of 4.728 million barrels.

“The EIA oil inventory falls suggest the rise in cases of COVID-19′s Delta variant is having little impact on mobility,” ANZ analysts said in a note.

Meanwhile, the U.S. Federal Reserve said the U.S. economic recovery is still on track despite a rise in daily COVID-19 cases as it handed down its latest policy decision on Wednesday. The decision left the interest rate unchanged between 0 % and 0.25% but did not provide a timetable for asset tapering.

The EIA data showed a bigger-than-expected 2.253-million-barrel draw in gasoline inventories, bringing them largely in line with pre-COVID-19 levels. However, fuel demand continues to be of concern for investors as gasoline demand in the U.S. and Europe beginning to fall.

It is widely expected that fuel demand will likely not recover to its pre-COVID-19 levels until 2022 should the number of COVID-19 cases continue to increase, and the vaccination rate continues to slow down.

“There appears to be quite a bit of hesitancy to push the market in either direction, leaving it in a holding pattern… there is still uncertainty over the demand picture, with COVID-19 cases continuing to tick higher,” ING Groep (AS:INGA) NV head of commodities strategy Warren Patterson told Bloomberg.