Oil held above $75 a barrel on Thursday, within sight of a multi-week high hit a day earlier, supported by a big drop in U.S. crude inventories and surging European natural gas prices.
U.S. crude inventories fell by 6.4 million barrels last week, more than the 3.5 million-barrel drop analysts expected, with offshore oil facilities still recovering from the impact of Hurricane Ida last month.
Brent crude was down 15 cents, or 0.2%, at $75.31 a barrel by 1128 GMT. On Wednesday, Brent touched $76.13, its highest since July 30. U.S. West Texas Intermediate (WTI) slipped by 18 cents, or 0.3%, to $72.43.
“Ida-affected oil production capacity continues to recover in the U.S. and this is expected to reflect on prices in coming days,” said Rystad Energy analyst Nishant Bhushan.
“But for now the slow pace of that recovery, coupled with the stronger crude inventory stock draw, seems to be supporting prices.”
Brent has rallied 45% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plus some recovery from last year’s pandemic-related collapse in demand.
Oil is also finding support from a surge in European power prices, which have soared because of factors including low gas inventories and lower than normal gas supply from Russia.
Benchmark European gas prices at the Dutch TTF hub have risen by more than 250% since January.
The price surge and impact on oil “is a situation that I believe will get much worse before it gets better”, said Jeffrey Halley, analyst at brokerage OANDA.
Adding to signs of oil demand recovery, closely watched reports this week said that global oil use will rise above 100 million barrels per day, a level last reached in 2019, as soon as next year’s second quarter.
Weighing on oil were signs of a resumption of recovery efforts in the U.S. Gulf after Hurricane Nicholas.