Oil prices rose on Wednesday on signs of a speedy economic recovery and upbeat forecasts for energy demand supported by vaccinations against Covid-19 although waves of infections in India and Brazil curbed gains.
Brent crude climbed $0.34, or 0.5% to $68.89 a barrel at 0951 GMT. West Texas Intermediate US crude rose $0.39, or 0.6%, to $65.67.
“Expectation that the economy and demand will recover rapidly have once again allowed Brent to climb,” said Commerzbank analyst Carsten Fritsch.
The International Energy Agency (IEA) said in its monthly report that demand for oil will exceed the output of top producers.
“The anticipated supply growth through the rest of this year comes nowhere close to matching our forecast for significantly stronger demand beyond the second quarter,” the IEA said.
Oil prices were also supported by the outlook from the Organisation of the Petroleum Exporting Countries (OPEC), which on Tuesday stuck to a forecast for a strong recovery in world oil demand in 2021, with growth in China and the United States outweighing the impact of the coronavirus crisis in India.
Data from the American Petroleum Institute industry group showed that US crude oil stocks fell by 2.5 million barrels in the week to May 7, two market sources said, a slightly lower than expected decline.
The fall came before the Colonial Pipeline was hit by a cyber attack last Friday, forcing the shutdown of a pipeline that transports more than 2.5 million barrels of fuel per day.
Gasoline stations from Florida to Virginia began running out of fuel on Tuesday as drivers rushed to top up their tanks, sending pump prices soaring.
US unleaded gasoline prices hit an average $2.99 a gallon, the highest since November 2014, the American Automobile Association said.
“While a prolonged outage would be supportive for refined product prices, it could start to weigh on crude oil prices if refiners on the US Gulf Coast are forced to reduce run rates due to a build-up of refined product inventories,” ING analysts said.
Colonial Pipeline has said it hopes to restart a large portion of the network by the end of the week.
Oil also found support from positive UK economic data while numbers for Germany and France were largely in line with estimates.
All eyes will be on US consumer price data for April, due later in the day.