Oil rises 2% as US demand bolsters, Fed outlook brightens

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Oil rises 2% as US demand bolsters, Fed outlook brightens

Both US WTI (West Texas Intermediate) alongside Brent crude oil futures jumped over 2 per cent on Thursday, mostly driven by a steep drawdown in US crude stockpiles coupled with an upbeat economic forecast from the US Federal Reserve, however, crude had pared some of the gains on Friday’s morning European trading.

Nevertheless, riskier assets such as crude oil futures had received a robust push on Wednesday, while the US Fed Chair Jerome Powell had flagged the US economy had been advancing at a breakneck pace and that a maximum employment could be a few weeks away, eventually sharpening up investors’ morale.

Adding further impetus for riskier assets, the US Fed had doubled up the pace of its bond-taper program and pledged to stop proffering stimulus for the economy by March, 2022, about a quarter earlier than a prior June 2022.

Apart from that, a drawdown in US crude stocks had added to further bullish breeze in the day’s global commodity market, while Saudi’s October crude exports had spiked to an 18-month high which came in as a sign of robust demand landscape.

Nonetheless, gains were more or less capped by an upsurge in Omicron cases in UK and S. Africa.

Crude oil gains as demand outlook brightens, US crude inventories drop

Citing statistics, in the day’s commodity market drawdown, UK crude futures’ prices gained 1.5 per cent to $75.02 a barrel, while US WTI crude oil contracts added 2.1 per cent to $72.38 per barrel.

Meanwhile, addressing to US Fed’s December 14-15 policy meet, a senior analyst at price futures group in Chicago, Phil Flynn said, “The market was fearful of what the Fed was going to do, and now that it's in the rearview and we know what we're dealing with, the market is rallying”.