LONDON: Oil gained for a second day on Thursday as traders remained buoyed by yesterday’s data showing a bigger-than-expected drop in US inventories, while the Federal Reserve painted an optimistic picture of the American economy.
Brent crude gained 0.7 percent to $75.23 a barrel at 2:44 p.m. in London, set to close above the $75 mark for the first time in two weeks. US Benchmark WTI also added 0.7 percent, to $72.87.
Brent, the global benchmark, passed $75 a barrel in June for the first time in more than two years but has fallen below $69 on July 17 on concerns over the spread of the Delta coronavirus variant and an OPEC+ deal to increase production over the coming months.
Crude in storage fell to the lowest since January 2020, while distillate supplies posted the biggest decline since April, the US Energy Information Agency said in its weekly report on Wednesday. Fuel inventories fell by more than 2 million barrels.
The US economy is continuing to recover even as COVID-19 infections increase, the Federal Reserve said on Wednesday, sparking speculation as to when it will begin to taper its bond purchase program.
In a separate report from the US Commerce Department today, the economy was shown to have grown at a 6.5 percent annual pace in the second quarter, below the 8.5 percent predicted in a Reuters poll of economists, but still enough to bring the economy back to its pre-pandemic size.
“The (oil inventory) falls suggest the rise in cases of COVID-19’s Delta variant is having little impact on mobility,” ANZ analysts said in a note on Thursday.
Oil prices also benefited from a statement from Iran blaming the US for stalled progress in talks over its nuclear ambitions, potentially delaying the return of Persian crude to world markets.
Global oil companies, including Royal Dutch Shell and Spain’s Repsol reported blockbuster earnings today as higher oil prices boosted returns.
Shell boosted its dividend and launched a $2 billion share buyback program on Thursday as it reported the highest second quarter profits in more than two years.
Shell Chief Financial Officer Jessica Uhl said that global fuel demand was at 90 percent to 100 percent of its pre-pandemic levels, but consumption of aviation fuel remained weak.
Spanish energy giant Repsol booked a net profit of 587 million euros ($700 million) foer the second quarter, compared to a loss of 1.9 billion euros in the same period last year.
“Demand has also increased, thanks in large part to vaccination rollout,” it said.
Repsol said revenues at its petrol stations in Spain jumped by 63 percent in the second quarter when compared to the same period last year as travel picked up following the easing of lockdowns.