Oil is rising in price Thursday morning after a significant increase in the previous session, caused by a reduction in fuel inventories in the U.S. Why is oil rising in price?

Oil price rise reason

Last week, oil inventories in the U.S. fell by 5.9 million barrels, said the Energy Department the day before. Experts expected a less significant reduction of 2.5 million barrels. At the same time, marketable reserves of gasoline rose by 2.53 million barrels, while distillates decreased by 242 thousand barrels. Traders and investors are watching closely to see how this will affect the current price of crude oil.

“Vigorous exports and falling imports due to the Keystone pipeline shutdown have led to a significant drop in crude inventories,” wrote Kplr Lead Oil Analyst Matt Smith. – Refinery usage has fallen to its lowest in seven weeks, which has somewhat limited the reduction in reserves, as has the release of 3.7 million barrels from strategic reserves.”

Additionally, market participants are keeping an eye on the coronavirus situation in the PRC. “Despite a spike in illness and reports of overcrowded hospitals, Chinese authorities are not quarantining cities, which means energy demand is rising as the world’s second-largest economy gets back on track,” MarketWatch quoted Sevens Report Research analysts as saying.

The cost of February futures for Brent at London’s ICE Futures Exchange is $82.56 per barrel, which is $0.36 (0.44%) above the level at the end of the previous session. At the close of trading on Wednesday, these contracts rose by $2.21 (2.8%) to $82.2 a barrel.

The price of WTI futures for February grew by $0.42 (0.54%) to $78.71 per barrel at electronic auctions of New York Mercantile Exchange (NYMEX) by that time. The contract rose by $2.06 (2.7%) to $78.29 per barrel at the end of the previous session.

Earlier, we reported that current crude oil prices continue to rise.