Oil prices rose about 1% on Wednesday, extending gains for a third session, after U.S. government data showed that fuel demand climbed to its highest since the start of the COVID-19 pandemic.
Brent crude settled $1.20, or 1.7%, higher at $72.25 per barrel. U.S. West Texas Intermediate (WTI) crude advanced 82 cents, or 1.2%, to $68.36 per barrel.
The four-week average for U.S. total product supplied, a proxy for fuel demand, soared to nearly 21 million barrels per day, its highest since March 2020, when governments first began to widely impose pandemic-related restrictions, U.S. Energy Information Administration data showed Wednesday.
U.S. crude inventories fell by 3 million barrels in the last week to 432.6 million barrels, the EIA said, about 1% higher than during the same time in 2019, before the pandemic. Refiners have ramped up production to 92.4% of operable capacity, the highest since late June.
Gasoline stocks fell by 2.2 million barrels in the week to 225.92 million barrels, EIA said.
Distillate stockpiles, which include diesel and heating oil, rose by 600,000 barrels in the week to 138.46 million barrels.
“The market is being led up by gasoline inventory draws and good gasoline demand as we head into the end of the summer driving season,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Over the last three sessions, both Brent and WTI have risen around 10%. The rally erased most a week-long slump triggered by a resurgence in COVID-19 cases.
Price gains came after Mexican supply fell by more than 400,000 barrels per day following a fire on an oil platform. Mexico’s state oil firm said it expected to resume production by Aug. 30.
“While volatility looks set to continue, we see further gains for oil as global economic normalization continues and OPEC remains disciplined on crude supplies,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
The bank expects Brent crude prices to rise to $75 a barrel by December.
In a sign that the spread of infections from the coronavirus Delta variant was easing in China, the country on Wednesday reported just 20 new confirmed coronavirus cases for Aug. 24, down from 35 a day earlier.