As the vaccine rollout continues, and recent data shows higher than expected draws in crude U.S. inventories, oil prices keep rising to a nine-month high record, increasing hopes of r a demand recovery.
Strong demand in Asia and a weakened dollar are also factors for the increase, that has become the largest since early March. As for now, prices have recovered by more than a 100% from their historic crash in April.
On Thursday, dollar hit a two-and-a-half years low record in front of other currencies, which pushes oil prices. As oil is priced in dollars, investors holding other currencies flock to the greenback as a safe haven, buying at cheaper prices.
Brent crude oil was up 22 cents and closed at $51,40 per barrel; it presented a trading peak of $51,90. While the West Texas Intermediate rose 28 cents, and closed at $48,21 a barrel, with a trading peak of $48,59.
Recommended for you: Exxon may invest $240 million in Louisiana refinery
Higher than expected draw in crude inventories
As we reported previously, the vaccine rollout is also a major factor affecting oil prices. Investors are looking more and more at the recovery potential, despite the recovery warns by the industry.
The expectancy is that the vaccination gradually allows an ease in lockdowns and crude oil and gasolines demand peak. For some oil investors, that recovery would happen as soon as this summer, while OPEC and the International Energy Agency have said that recovery will start as soon as mid 2021.
“All the headlines have been bullish for oil prices,” said Edward Moya, senior market analyst at OANDA, quoted by Reuters.
Earlier this week, the Energy Information Administration reported a larger than expected draw on U.S. crude oil inventories, which also boosted oil prices. According to the agency, inventories fell by 3,1 million barrels, while EIA’s expectation was of a 1,9 million barrels draw.
This increase, added to a strong demand in Asia, prompted a speedy recovery hope. “Three of India’s refiners are operating almost at 100% capacity, indicating crude demand remains strong, and it seems the U.S. will continue to deliver more monetary and fiscal stimulus, sending the dollar lower and most commodities higher,” concluded Moya.