Oil rebounds as US crude, gasoline stockpile drops provide some support

Brent crude oil price news: Oil prices rebounded on Thursday after falling in the previous session as US crude and gasoline inventory declines supported the market after signs the US Federal Reserve may keep rates higher for longer crimped the outlook for future fuel demand. Brent crude oil futures contract for May settlement rose 0.6 per cent, or 52 cents, at $86.47 a barrel at 0155 GMT, after falling 1.6 per cent on Wednesday. US West Texas Intermediate futures for May delivery rose 0.5 per cent, or 45 cents, to $81.72 a barrel, after falling 1.6 per cent in the previous session. The April contract expired on Wednesday down 2.1 per cent at $81.68.

Crude inventories in the US, the world's biggest oil consumer, fell for a second week, the US Energy Information Administration (EIA) reported on Wednesday. Stockpiles declined unexpectedly by 2 million barrels to 445 million barrels in the week ended March 15, versus analysts' expectations in a Reuters poll for a 13,000-barrel rise.

The stockpiles fell as exports rose and refiners continued to increase activity. Gasoline inventories fell for a seventh week, down by 3.3 million barrels to 230.8 million, and suggesting steadily strong fuel demand. Oil refinery runs ramped up by 127,000 barrels per day and utilization rates rose. The inventory numbers gave some support to the market after a mixed outlook from US Fed policy makers on rate cuts this year impacted prices earlier.

While the Fed Reserve kept interest rates in the 5.25 per cent to 5.50 per cent range on Wednesday, policy makers barely kept to an outlook for three rate cuts this year, which suggested rates may stay higher for longer. The higher rates over a longer period could mean reduced economic growth which would impact future fuel demand.

But continued concerns on how Ukrainian attacks on Russian refineries would impact global petroleum supplies are supporting prices as well. "The market remains wary of ongoing supply side issues. The Ukrainian drone strikes that took out 12 per cent of Russia's total oil processing capacity are likely to tighten the market amid the ongoing cutbacks from OPEC," said analysts by ANZ Research in a note, referring to the Organization of the Petroleum Exporting Countries.

Ukraine has stepped up attacks on Russian oil infrastructure amid a more than two-year war, with at least seven refineries targeted by drones this month. The attacks have shut down 7 per cent, or around 370,500 barrels per day, of Russian refining capacity, according to Reuters calculations. Analysts say prolonged disruptions could force Russian producers to reduce supply if they are unable to export crude oil and face storage constraints.