(Bloomberg) — Oil advanced off of one-month highs after a government report showed that U.S. crude inventories dropped and traders bet the fast-spreading omicron variant would prove to be less severe than earlier virus waves.
West Texas Intermediate rose over 1%, trading above $76 a barrel on Wednesday. U.S. stockpiles fell 3.58 million barrels last week, in line with expectations, according to government data. U.S. crude stocks are now at the lowest since September.
Investor worries about omicron are easing on growing evidence that the variant is milder in nature, potentially reducing the need to impose restrictions on movement. The rapid spread of omicron has yet to hit road traffic across most of Asia, mobility data compiled by Bloomberg show.
Crude is heading for its biggest annual gain in more than a decade after global consumption recovered from the pandemic with the roll-out of vaccines. That helped to deplete once-bloated oil inventories, especially in the U.S.
Oil’s recovery has also been supported by the Organization of Petroleum Exporting Countries and allies including Russia taking a cautious approach to restoring output. The group is due to meet next week to assess policy heading into 2022. Ahead of that gathering, Russian Deputy Prime Minister Alexander Novak said the country is comfortable with prices between $65 and $80 a barrel.
There was also the potential for bullish technical momentum, after Brent on Tuesday closed above its 50-day moving average for the first time in a little over a month. That was the latest notable milestone in the market’s recovery from a rout late last month.
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