Oil Futures Settle Sharply Higher

Crude oil futures settled higher on Thursday, aided by data showing increased demand for energy in the U.S., and a larger than expected drop in U.S. crude stockpiles last week.

The dollar’s weakness against other major currencies amid easing uncertainty about tapering of the asset-purchase program and interest rate hikes contributed as well to oil’s uptick.

The Federal Reserve said on Wednesday that it would double the speed of the tapering of its bond purchasing program and projected three rate hikes in 2022, citing rising price pressures and improvement in the labor market.

The dollar index drifted down to 95.85 and despite recovering subsequently, remained in negative territory at 96.10, down more than 0.4% from the previous close.

West Texas Intermediate Crude oil futures for January ended higher by $1.51 or about 2.1% at $72.38 a barrel, the highest settlement since November 24.

Brent crude futures were up $0.80 or 1.1% at $74.68 a barrel a little while ago.

Data released by Energy Information Administration (EIA) showed crude inventories in the U.S. dropped by 4.6 million barrels in the week ended December 10.

The EIA data also said gasoline stockpiles were down by nearly 720,000 barrels last week, while distillate stocks fell by 2.85 million barrels in the week.

The EIA said product supplied by refineries, a proxy for demand, surged in the most recent week to 23.2 million barrels per day (bpd).

Fed Chair Jerome Powell put forward a bullish outlook on the economy saying consumer demand, labour market, and overall economic conditions in the United States are “hot”.

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