Oil prices rose on Thursday to extend gains from the previous session after the International Energy Agency lifted its demand outlook, despite signs of a wider economic slowdown.
Soaring oil use for power generation in Europe and the Middle East will boost crude consumption for the rest of the year, the Paris-based IEA said in its monthly report.
Benchmark Brent crude futures gained 0.8 percent to trade at $98.20 a barrel, while WTI crude futures were up 0.7 percent at $92.61.
“Natural gas and electricity prices have soared to new records, incentivizing gas-to-oil switching in some countries,” said the IEA while raising its outlook for 2022 demand by 380,000 barrels per day (bpd).
The IEA also said that Russia’s oil output will likely fall roughly 20 percent by the start of next year as a European Union import ban comes into force.
A weakening dollar on the back of softer-than-expected U.S. inflation data and official data showing increased demand for gasoline also contributed to the surge in oil prices.
The dollar index remained on the back foot amid hopes that inflation in the United States may have peaked, which could allow the Fed to slow the pace of interest rate increases.
Data from Energy Information Administration (EIA) showed that crude oil inventories jumped by 5.458 million barrels last week, as against expectations for a rise of 73,000 barrels.
However, gasoline stockpiles dropped by 4.978 million barrels, substantially larger than the expected drop of 633,000 barrels.
The EIA data also showed an outflow of 5.3 million barrels from the U. S. emergency oil reserve last week, resulting in the balance in the Strategic Petroleum Reserve dropping to 464.6 million barrels, the lowest level since April 1985.
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