(Bloomberg) — Oil was near its highest level since November, as the Federal Reserve soothed expectations of tighter policy and industry estimates pointed to another drawdown in U.S. crude stockpiles.
West Texas Intermediate traded above $81 a barrel after rallying 3.8% on Tuesday. The American Petroleum Institute reported that U.S. crude inventories fell by about 1 million barrels last week, according to people familiar with the figures. That followed a monthly report from the U.S. Energy Information Administration on Tuesday that showed global oil inventories will decline slightly in the first quarter, compared to a previous forecast of expansion.
Crude’s rally on Tuesday to the highest close since Nov. 11 came alongside gains in raw materials and equities after Federal Reserve Chair Jerome Powell sought to reassure investors the central bank can rein in inflation without damaging the U.S. economy. In addition to its stronger balance for the first quarter, the EIA also said global oil stockpiles declined by almost 3 million barrels a day in December, underscoring recent bullish price moves.
“Pandemic-spurred demand fears continued to fade amid expectations that the impact of omicron will be limited,” said Stephen Brennock an analyst at brokerage PVM Oil Associates.
Oil has been buffeted by wider sentiment in financial markets so far this year. Another major driver is likely to come later on Wednesday when U.S. inflation figures are released.
Official data on U.S. oil stockpiles follow later on Wednesday from the EIA. Should they confirm a drop, it would be a seventh successive fall.
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