(Bloomberg) — Oil steadied near a two-week high after and fuel stockpiles posted strong declines, signaling peak summer demand remains robust despite a resurgence of Covid-19.
Futures in New York traded above $72 a barrel after climbing 1% on Wednesday. Crude inventories dropped more than expected last week to the lowest level since January 2020, while supplies of distillates — a category that includes diesel — slid the most since April, according to a government report.
See also: U.S. Refiners Miss Out on America’s Fuel Boom Amid Setbacks
Oil has whipsawed throughout July and is set for only the second monthly loss since October after the virus comeback coincided with an OPEC+ agreement to boost output from August. The fast-spreading delta variant has led to renewed restrictions in some regions and raised concerns about short-term demand, although there are expectations the market will continue to tighten.
The prompt timespread for was 89 cents a barrel in backwardation — a bullish market structure where near-dated contracts are more expensive than later-dated ones. That compares with 64 cents a week earlier.
U.S. crude stockpiles shrunk by 4.09 million barrels last week, according to data from the Energy Information Administration, compared with a forecast in a Bloomberg survey for a 2.5-million barrel decline. Gasoline inventories also fell, dropping by 2.25 million barrels.
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