TOKYO- Oil prices rose on Thursday, reversing previous losses, on expectations that high natural gas prices as winter approaches may drive a switch to oil to meet heating demand needs.
Brent crude futures gained 28 cents, or 0.3 percent, to $83.46 a barrel after falling 0.3 percent on Wednesday.
US West Texas Intermediate (WTI) crude futures climbed 22 cents, or 0.3 percent, to $80.66 a barrel, after dropping 0.3 percent the previous day.
“Investors bet that surging gas prices will encourage power generators to switch to oil as winter demand season is approaching,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Prices were also supported by concerns about supply tightness after the US Energy Information Administration (EIA) said on Wednesday that crude oil output in the United States, the world’s biggest producer, is going to decline in 2021 more than previously forecast thought it will bounce back in 2022.
“The current tightness in the crude market and near-term outlook for seasonal demand increases lent support to investors’ sentiment, outweighing a bigger-than-expected build in the US crude inventories and weaker demand forecast by OPEC,” Kikukawa said.
The American Petroleum Institute (API) said late on Wednesday that US crude stockpiles rose by 5.2 million barrels for the week ended Oct. 8, according to market sources who saw the API data.
The API also reported gasoline inventories fell by 4.6 million barrels and distillate stocks fell by 2.7 million barrels, the sources said.
Analysts in a Reuters poll expected crude inventories to rise by 700,000 barrels.
OPEC has trimmed its world oil demand growth forecast for 2021 while maintaining its 2022 view, its monthly report showed on Wednesday, but it said surging natural gas prices could boost demand for oil products as end users switch.
The Organization of the Petroleum Exporting Countries (OPEC) now expects oil demand to grow by 5.82 million barrels per day, (bpd), down from 5.96 million bpd in its previous forecast, saying that the downward revision was mainly driven by data for the first three quarters of the year. – Reuters