Oil rallies on tight U.S. stocks as winter blast hits

MELBOURNE  – Oil prices rose for a fourth straight day on Thursday with U.S. crude, heating oil and jet fuel stocks seen tight just as a chilly blast hits the United States and travel is set to soar for the holiday season.

U.S. West Texas Intermediate (WTI) crude futures climbed 35 cents, or 0.5 percent, to $78.64 a barrel, while Brent crude futures gained 27 cents, or 0.3 percent, to $82.47 at 0145 GMT, extending gains of around 2.7 percent in the previous session.

Both benchmark contracts jumped on Wednesday after government data showed U.S. crude inventories fell by much more than analysts had expected, posting a drop of 5.89 million barrels for the week ending Dec. 16.

At the same time there was a decline in distillate stocks, which include heating oil and jet fuel, which defied expectations for a build.

The falling stockpiles come as demand for heating oil is set to soar with a powerful winter storm hitting the United States, expected to bring sub-zero wind chills as far south as Texas and record-breaking lows to Florida and the eastern states.

Jet fuel consumption is also expected to pick up with a post-COVID boom in travel for the end-of-year holiday season.

“On our numbers…the crude market is finely balanced,” said National Australia Bank’s head of commodity research Baden Moore.

“As we look into 2023, we see China’s re-opening and a likely continued steady roll-up in global jet demand (towards 2019 levels) will tighten global crude markets and drive prices higher,” he said.

A softer U.S. dollar has also buoyed oil prices, as crude becomes cheaper for buyers holding other currencies.