Oil prices up on estimated fall in US crude stocks

Oil prices rose on Wednesday on a larger-than-expected drop in US crude oil inventories and positive outlooks from OPEC+ over oil demand in 2021.

International benchmark Brent crude was trading at $64.41 per barrel at 0611 GMT for a 1.16% increase after closing Tuesday at $63.67 a barrel.

American benchmark West Texas Intermediate was at $60.99 per barrel at the same time for a 1.34% increase after it ended the previous session at $60.18 a barrel.

Late Tuesday, the American Petroleum Institute announced its estimate of a fall of 3.6 million barrels in US crude oil inventories relative to the market expectation of a draw of 2.1 million barrels.

The forecast of a larger inventory draw signals a rebound in crude demand in the US, the world's largest oil consumer, to relieve investor fears over falling demand and positively support prices.

Furthermore, in its Monthly Oil Market Report, the Organization of Petroleum Exporting Countries (OPEC) revised up its global oil demand forecast by around 6% to an average of 96.5 million barrels per day (bpd) in 2021.

Although warning that risks would remain high during 2021, subject to COVID-19 developments and the pace of reaching herd immunity targets, the report projected that oil demand in the second half of 2021 would be positively impacted by a stronger economic rebound than assumed last month.

Stimulus packages and the further easing of COVID-19 lockdown measures, amid an acceleration in the vaccination rollout, largely in the OECD region, support a revival, the report said.

The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, fell 0.12% to 91.75.

The decline in the value of the greenback is encouraging oil-importing countries to purchase more crude oil at cheaper dollar prices, which in turn is supporting higher crude prices.