Tokyo — Oil prices rose on Thursday, reversing previous losses, on expectations that high natural gas prices as winter approaches may drive a switch to oil to meet heating demand needs.
Brent crude futures gained 28 US cents, or 0.3%, to $83.46 a barrel at 1.07am GMT after falling 0.3% on Wednesday.
US West Texas Intermediate (WTI) crude futures climbed 22c, or 0.3%, to $80.66 a barrel, after dropping 0.3% the previous day.
“Investors bet that surging gas prices will encourage power generators to switch to oil as winter demand season is approaching,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Prices were also supported by concerns about supply tightness after the US Energy Information Administration (EIA) said on Wednesday that crude oil output in the US, the world’s biggest producer, is going to decline in 2021 more than previously forecast though it will bounce back in 2022.
“The current tightness in the crude market and near-term outlook for seasonal demand increases lent support to investors’ sentiment, outweighing a bigger-than-expected build in the US crude inventories and weaker demand forecast by Opec,” Kikukawa said.
The American Petroleum Institute (API) said late on Wednesday that US crude stockpiles rose by 5.2-million barrels for the week ended October 8, according to market sources who saw the API data.
The API also reported petrol inventories fell by 4.6-million barrels and distillate stocks fell by 2.7-million barrels, the sources said.
Analysts in a Reuters poll expected crude inventories to rise by 700,000 barrels.
Oil cartel Opec trimmed its world oil demand growth forecast for 2021 in its latest monthly report on Wednesday, while maintaining its 2022 view.
However, the producer group said rising natural gas prices could boost demand for oil products as end users switch fuels.
The EIA will release its inventory report later on Thursday at 3pm GMT.