Oil prices held on to their gains from the previous session on Thursday, as signs of stronger demand helped offset an unexpected rise in U.S. inventories.
U.S. West Texas Intermediate (WTI) crude was up 60 cents, or 0.88%, to $70.85 a barrel, after rising 4.6% on Wednesday.
Brent crude was up 53 cents, or 0.64%, to $72.70 a barrel after rising 4.2% in the previous session.
“The market shrugged off a rise in (U.S.) commercial inventories… with most of the gains occurring on the West Coast, a distribution system that is separate from the rest of the country,” analysts from ANZ Bank said in a note.
“Supplies at Cushing, the WTI pricing point, fell to their lowest level since January 2020,” they added.
Crude inventories in the world’s top oil consumer rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.
Analysts had expected a 4.5 million-barrel drop.
Still, gasoline and distillate inventories posted draws of 121,000 barrels and 1.3 million barrels, respectively, indicating higher demand due to the summer driving season.
With OPEC+, comprising the Organization of the Petroleum Exporting Countries and allies like Russia, unlikely to get to the market soon and Iranian negotiations delayed, the most relevant risk to market fundamentals remains a deterioration of demand due to new restrictions, analysts from Citi said.
“Only a really tremendous demand shortfall would tip the market balance into a surplus,” they added.
JPMorgan analysts expect global demand to average 99.6 million barrels per day (mbd) in August, up by 5.4 mbd from April.
Oil prices fell earlier this week following a deal by OPEC+ to boost supply by 400,000 barrels per day from August through December.