NEW YORK: Oil prices rose on Wednesday on fears of tight supply and a drawdown in US inventories, despite worries about the likely hit to economic activity from the spread of the omicron coronavirus variant.
US inventories fell more than expected, with crude stocks down by 4.7 million barrels, though that is in part due to year-end tax considerations that encourage companies not to store crude barrels.
Brent crude futures rose by 79 cents, or 1.1 percent, to $74.76 a barrel after gaining 3.4 percent in the last session.
US West Texas Intermediate crude futures were up 99 cents to $72.11 a barrel, a 1.4 percent rise, as of 12:23 p.m. EST (1723 GMT).
“We saw a drop in production, we saw inventories and crude fall, so that’s giving the market a supportive outlook,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “Because supplies are below average across the board, there’s not a lot of room for error.”
Gasoline storage rose sharply in the most recent week, fanning worries that US travelers were abruptly changing plans, potentially hurting demand in the world’s largest gasoline consumer.
“COVID-19 is killing demand for gasoline in just a week — people driving is just not happening,” said Bob Yawger, director of energy futures at Mizuho Securities.