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April 13, 2022
For the second day in a row, crude oil prices soared, up about 4% on Wednesday after surging more than 6% in the previous session. That sent oil up again this week by around 6%, after consecutive declines in the past two weeks that cumulatively sent the market back by 13%.
Global benchmark Brent crude closed $4.14, or 4%, at $108.78 a barrel, adding to Tuesday's 6.3% gain. Benchmark US crude traded on New York's West Texas Intermediate, or WTI, finished the session up $3.65, or 3.6%, to $104.25. In the previous session, it was up 6.7%.
Crude prices have started to rise since Tuesday as China scrapped some of its strictest Covid lockdown measures in two weeks, boosting hopes of increased energy consumption in the No. 1 oil consumer. 2 worlds.
Oil was also helped in the previous session by caution from the 23-member OPEC+ alliance that its non-Russian members cannot, or will not, make up for lost Russian production due to Western sanctions.
Wednesday's rally came on the back of higher US fuel consumption shown by weekly inventory data released by the Energy Information Administration, or EIA.
In addition to increases in car and truck fuels such as gasoline and diesel, Delta Airlines also praised consumer acceptance of higher fares that helped it offset costs, suggesting that demand for jet fuel will also increase.
Adding to the market gains were renewed geopolitical tensions from the Russo-Ukrainian conflict, with Moscow warning that any attack on its territory would be met with attacks in the places where the decision was made, including Kyiv.
Oil prices look very comfortable above the $100 level as U.S. and Chinese demand appears to be heading in the right direction, said Ed Moya, an analyst at online trading platform OANDA.
The EIA said inventories of gasoline, America's most consumed oil product, fell by 3.65 million barrels in the week to April 8, compared to a decline of 2.04 million during the previous week to April 1.
Stockpiles of distillates, which are refined into diesel for trucks, buses, trains, and ships and fuel for jets, fell by 2.9 million barrels last week compared to an increase of 771,000 barrels the previous week. Analysts had expected a decline of 515.00 barrels for last week.
The decline in fuel products offset any bearish sentiment stemming from the highest weekly gain in more than a year in US crude stockpiles amid the big release of the country's emergency reserves.
Crude inventories rose by 9.4 million barrels last week, compared to a 2.4 million growth in the previous week. The historical EIA showed the highest weekly gain in oil stockpiles since the week ending March 5, 2021.
The increase came amid the weekly release of 3.0 million barrels or more of the US Strategic Petroleum Reserve, or SPR, authorized by the Biden administration to bridge a supply shortfall intensified by Western sanctions on Russia.
EIA data showed that for the second week in a row, US crude oil imports from Russia were at zero. Analysts polled by US media had anticipated an average gain of 2.4 million barrels for the week ended April 8.
President Joe Biden began tapping the SPR in November to give US oil refiners a loan from the reserves that they don't have to repay but return within a set timeframe.
In this way, the President hopes that oil transactions in the open market will decrease and the price of crude oil and fuel products such as gasoline and diesel will decrease.
Before this, the Biden administration had ordered the release of 30 million barrels of SPR in March and another 50 million barrels in November in coordination with other oil-consuming countries including China, Japan, India, South Korea, and the UK.
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