Oil prices continued their increase for a second consecutive day on Thursday, buoyed by expectations of increased demand in the United States, the world’s largest oil consumer.
By 6:24 GMT, Brent crude futures saw a 0.30 percent increase to $83.28 per barrel. Meanwhile, U.S. West Texas Intermediate crude futures (WTI) saw a 0.33 percent increase to $78.17 per barrel. This follows the 1 percent increase in oil prices observed on Wednesday.
Analysts noted the resilience of oil prices, with market participants eyeing a potential retest of the year-to-date high achieved in February. Geopolitical tensions have also provided support to the market sentiment, contributing to the positive trajectory.
Inventory concerns
Despite the optimism, concerns linger regarding inventory build-ups, particularly in U.S. crude stocks and their effect on oil prices. According to figures from the American Petroleum Institute, crude stocks rose by 7.17 million barrels in the week ending February 16th. Gasoline stockpiles also experienced an increase, and distillate fuel inventories declined. The increase in inventories, in addition to outages at major refineries, has led to the lowest utilization rates in two years.
Production outlook
The market also awaits the efforts to resume operations at major refineries and their impact on oil prices. BP’s 435,000 barrel-per-day refinery in Indiana, the largest in the U.S. Midwest, will return to full production in March following a power outage that started in February 1. Similarly, TotalEnergies’ Port Arthur refinery in Texas is gradually resuming operations after weather-related disruptions. Therefore, analysts anticipate an 81.5 percent rise in U.S. refinery run rates from 80.6 percent of total capacity in the previous week, reflecting a potential improvement in overall production capacity.
Moreover, investor attention now turns to the official inventory data from the U.S. Energy Information Administration (EIA), scheduled for release at 16:00 GMT today. This data will provide crucial insights into the current supply-demand dynamics in the oil market and its effect on prices.
Read: Gold prices hit one-week high ahead of Fed meeting
Weakening dollar
Another contributing factor to the bullish oil prices is the weakening U.S. dollar. With the dollar index falling to 103.905 at 05:10 GMT, oil becomes more affordable for traders holding other currencies. Analysts suggest that the continuous retreat of the U.S. dollar over four consecutive sessions may further enhance the short-term appeal of oil investments.
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