Oil prices rose more than 1% on Wednesday, putting the contracts on track for their highest close in almost eight weeks, as U.S. crude exports plunged and on signs of a speedy economic recovery and upbeat forecasts for energy demand.
That puts both benchmarks on track for their highest closes since March 11. Earlier in the session, WTI on track for its highest close since Oct. 29, 2018 and Brent for its highest close since May 28, 2019.
U.S. crude exports fell last week to around 1.8 million barrels per day (bpd), their lowest since October 2018, while crude inventories declined 0.4 million barrels versus an expected 2.8 million-barrel draw, according to weekly government data.
"The export (drop) is the bullish element keeping trade propped up," Tony Headrick, energy market analyst at CHS Hedging, said, noting the crude stock "drawdown combined with the lack of exports is good sign."
Traders noted one factor weighing on prices this afternoon was the U.S. inventory report also showed total oil products supplied fell 2.2 million bpd to 17.5 million bpd. That was their biggest weekly decline and the lowest weekly demand since January.
The International Energy Agency (IEA) said in its monthly report that oil demand is already outstripping supply and the shortfall is expected to widen even if Iran boosts exports.
Similarly, the Organization of the Petroleum Exporting Countries 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.
"Oil prices today are experiencing a lift on positive demand outlooks released by OPEC and IEA, which both came out with a similar consensus that oil demand will average 96.4 million bpd in 2021," said Louise Dickson, oil markets analyst at Rystad Energy.
Oil also found support from positive economic data. Britain's pandemic-battered economy grew more strongly than expected in March, while U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints.
India's coronavirus death toll crossed 250,000 in the deadliest 24 hours since the pandemic began.
In the United States, fuel shortages worsened as the shutdown of the Colonial Pipeline, the nation's largest fuel pipeline network, entered its sixth day and gasoline stations from Florida to Virginia ran out of supply in some cities.
Colonial, which transports more than 2.5 million bpd, said it hopes to restart a large portion of the network by the end of the week.
The gasoline crack spread - a measure of refining profit margins - was on track for its highest close since hitting a record high on April 20, 2020 when WTI futures turned negative, according to Refinitiv data.