SINGAPORE: Oil prices rose in Asia on Thursday, tracking a broad advance across equity markets, as the dollar weakened and after private data showed another drop in US inventories.
The pick-up extended the previous day’s rally, with analysts saying they expect demand for petrol to improve with the US summer driving season about to fully kick into gear.
The American Petroleum Institute (API), a private industry group, said Wednesday that stockpiles dropped more than expected again last week, raising hopes a supply glut in the world’s top oil consumer is easing.
The figures bode well ahead of the release official data from the US Department of Energy later Thursday.
At about 6:50 a.m. local time, US benchmark West Texas Intermediate was up 12 cents, or 0.25 percent, at $47.55 while Brent rose five cents, or 0.10 percent, to $48.85.
“The primary driver is the API numbers that popped out, which suggested that there was a bigger draw down than the market was expecting,” David Lennox, a resource analyst at Fat Prophets in Sydney, told Bloomberg News.
However, he cautioned: “We still think there is a surplus in the market. A sustained rally will be very difficult.”
Brent plunged 4.3 percent and WTI dived 4.9 percent on Tuesday in line with a sell-off across global asset markets as worries about Britain’s vote to leave the European Union fuelled uncertainty.
The gains late Wednesday and early Thursday also matched a slight recovery in confidence that has seen dealers shift back into higher-yielding, riskier, investments.
This has seen the dollar retreat against most emerging market currencies, making oil cheaper for anyone holding those units.