West Texas Intermediate traded above $71 a barrel after rising as much as 1.9%. Nationwide stockpiles sank more than 6 million barrels, including a drop at the key storage hub in Cushing, Oklahoma, according to the industry-funded American Petroleum Institute.
Crude has fared strongly in September after extreme weather disrupted U.S. supplies and as a rally in natural gas spurred expectations oil demand may benefit from switching. In Asia, China’s central bank injected more short-term cash into the financial system, alleviating some concern over the crisis at China Evergrande Group and aiding industrial commodities while the Federal Reserve’s latest interest rate decision will be released later.
“Today’s double whammy of the latest Fed decision and EIA stock report will set the tone for oil prices,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates.
ConocoPhillips sees oil demand returning to pre-pandemic levels by early next year as demand rises, Chief Executive Officer Ryan Lance told Bloomberg Television. Supply, on the other hand, will remain constrained from OPEC+ and shale fields, and as major companies embrace the energy transition, he said.
The spread between Brent’s two nearest December contracts rose to $6.36 a barrel in backwardation, a bullish pattern. The gap has ballooned from $3.34 in mid-August, suggesting traders are more positive about the outlook.