Oil prices rise 1% after boost from US fuel demand

9:30 am Thursday, October 31st, 2024

LONDON (Reuters) -Oil prices gained 1% on Thursday after rallying the previous day on stronger than expected U.S. fuel demand and reports that producer group OPEC+ could delay a planned output increase.

Traders are also awaiting the outcome of the U.S. presidential election on Nov. 5 and whether ceasefires can be brokered in the Middle East.

Brent futures rose by 75 cents, or 1%, to $73.30 a barrel by 1320 GMT. WTI futures were up 91 cents, or 1.3%, at $69.52.

Both contracts gained more than 2% on Wednesday.

U.S. gasoline stockpiles fell more than expected to a two-year low in the week ending Oct. 25, the Energy Information Administration said, while crude inventories registered a surprise drawdown as imports slipped. [EIA/S]

“The surprise decline in U.S. gasoline stockpiles provided a buying opportunity as demand appeared stronger than anticipated,” said Fujitomi Securities analyst Toshitaka Tazawa.

Further support came from a potential delay to planned OPEC+ oil production increases from December by a month or more because of concern over soft oil demand and rising supply.

A decision could come as early as next week, Reuters reported. OPEC+ is scheduled to meet on Dec. 1 to decide its next policy steps.

Elsewhere, manufacturing activity in China, the world’s biggest oil importer, expanded in October for the first time in six months, suggesting stimulus measures are having an effect.

Brent and WTI futures had fallen by more than 6% on Monday on reduced risk of Iran’s direct involvement in the wider Middle East conflict and negotiators are now pushing for ceasefires in Lebanon and Gaza.

With ebbing fears of war in the Middle East spreading further, market attention has turned back to expectations for deteriorating global oil balances in 2025, when supply is expected to exceed demand, said Ole Hansen, head of commodity strategy at Saxo Bank.

(Reporting by Paul Carsten in London, Yuka Obayashi in Tokyo and Colleen Howe in BeijingEditing by David Goodman)