By Scott DiSavino
NEW YORK (Reuters) - Oil prices rose to an eight-week high on Wednesday as U.S. crude exports plunged and on signs of a speedy economic recovery and upbeat forecasts for energy demand.
Brent (LCOc1) futures rose 77 cents, or 1.1%, to settle at $69.32 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 80 cents, or 1.2%, to settle at $66.08.
That was the highest close for Brent since March 11 and for WTI since March 5.
U.S. crude exports fell last week to around 1.8 million barrels per day (bpd), their lowest since October 2018, while crude inventories declined 0.4 million barrels versus an expected 2.8 million-barrel draw, according to weekly government data. [EIA/S]
"The export (drop) is the bullish element keeping trade propped up," Tony Headrick, energy market analyst at CHS Hedging, said, noting the crude stock "drawdown combined with the lack of exports is good sign."
Traders noted one factor in the U.S. inventory report that weighed on prices was a 2.2 million bpd drop in total oil products supplied to 17.5 million bpd last week. That was the biggest weekly decline and lowest weekly demand since January.
The International Energy Agency (IEA) said in its monthly report that oil demand is already outstripping supply and the shortfall is expected to widen even if Iran boosts exports.
Similarly, the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday stuck to a forecast for a strong recovery in world oil demand in 2021, with growth in China and the United States outweighing the impact of the coronavirus crisis in India.
"Oil prices today are experiencing a lift on positive demand outlooks released by OPEC and IEA, which both came out with a similar consensus that oil demand will average 96.4 million bpd in 2021," said Louise Dickson, oil markets analyst at Rystad Energy.
Positive economic data also supported oil. Britain's pandemic-battered economy grew more strongly than expected in March, while U.S. consumer prices increased in April by the most in nearly 12 years, as booming demand in a reopening economy strained supply.
India's coronavirus death toll crossed 250,000 in the deadliest 24 hours since the pandemic began.
(Graphic: Call on OPEC+ crude vs. production - https://fingfx.thomsonreuters.com/gfx/mkt/jbyvryqddpe/OPECcrudecall.PNG)
Fuel shortages worsened in the southeastern United States as the shutdown of the Colonial Pipeline, the nation's largest fuel pipeline network, entered its sixth day.
Colonial, which transports more than 2.5 million bpd, said it hopes to restart a large portion of the network by the end of the week.
(Graphic: Global oil supply - https://fingfx.thomsonreuters.com/gfx/mkt/xlbvgaldxvq/globaloilsupplies.PNG)