Oil prices steadied on Thursday following two straight days of gains that took oil futures to highs not seen in a year, after weekly U.S. crude stocks fell sharply while fuel inventories rose more than expected.
Brent futures settled at $71.31 a barrel, down 4 centsafter touching its highest since May 2019 earlier in the session. U.S. crude settled at $68.81 a barrel, losing 2 cents. WTI prices rose as high as $69.40, the strongest since October 2018, after gaining 1.5% in the previous session.
U.S. crude inventories dropped by 5.1 million barrels last week, compared with expectations for a decrease of 2.4 million barrels, while gasoline stocks grew by 1.5 million barrels and distillate stockpiles jumped by 3.7 million barrels.
“They burned through a lot of crude oil though, and we had builds in gasoline and distillate,” Bob Yawger, director of energy futures at Mizuho in New York. “You don’t want to be burning that much crude and then the customers don’t want it.”
Gasoline demand jumped last month on panic buying following the closure of the Colonial Pipeline, the largest U.S. refined products line, which meant drivers were less likely to need to fill up their tanks over Memorial Day weekend, the start of peak summer driving season.
“Gasoline demand was off week-over-week which may disappoint some people, but it’s still solid,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Oil prices have risen in recent days on expectations from forecasters, including the Organization of the Petroleum Exporting Countries (OPEC) and its allies, that oil demand will exceed supply in the second half of 2021.
OPEC+ agreed on Tuesday to continue with plans to ease supply curbs through July, giving oil prices a boost, in anticipation of improved consumption.
Also supporting prices was a slowdown in talks between the United States and Iran over Tehran’s nuclear program, which reduced expectations for a return of Iranian oil supplies to the market this year.