OIL prices rose early on Thursday following a day-prior report showing a big drop in U.S. oil inventories that boosted optimism that demand remains high while the Federal Reserve moved to take faster steps to cool inflation.
West Texas Intermediate crude for January delivery was last seen up US$0.58 to US$71.45 per barrel, while February Brent crude, the global benchmark, was up US$0.59 to US$74.47.
The rise comes a day after the Energy Information Administration reported U.S. oil inventories fell a more than expected 4.6-million barrels, showing demand remains high despite the rapid spread of the Covid-19 omicron variant globally.
As well, the Federal Reserve on Wednesday said it will speed the end of monthly bond purchases introduced as economic support early in the pandemic and could raise interest rates as much as three times in 2022 as it looks to bring down an inflation rate that is running at a 39-year high.
As well, the Bank of England also moved to cut inflation with a surprise 15 basis point rise in interest rates.
“With its accelerated exit from its ultra-expansionary monetary policy, the Fed is apparently giving the impression that everything is under control.
And on the other hand, the oil market-specific data were positive: the US Department of Energy reported a considerable decline in crude oil and oil product stocks, with crude oil seeing its most pronounced inventory reduction since September,” Commerzbank analyst said in a note.
US November Industrial Production Rises
US industrial production rose by 0.5% in November, compared with expectations for a slightly larger 0.6% increase in a survey compiled by Bloomberg, but following an upwardly revised 1.7% increase in October.
Manufacturing production rose by 0.7% on a 2.2% gain in motor vehicle and parts production, while mining production also rose 0.7%.
However, utility production fell by 0.8% after a 0.6% gain in October due to a drop in electricity usage. Capacity utilization rose to 76.8% in November from a 76.5% rate in October, as expected.
