Oil continued to climb towards $74 on Thursday, extending the previous day’s 2% rise following an unexpectedly large drop in crude and gasoline stocks in top consumer the United States.
Stock markets also moved higher after comments from the Federal Reserve boosted expectations for a US interest rate cut.
US crude was up 28 cents at $73.79 a barrel by 0959 GMT, having jumped $1.78 on Wednesday to its highest settlement in over three weeks.
London Brent crude was up 13 cents at $72.26.
Crude oil stocks in the US fell by a deeper than expected 3.5 million barrels in the week to Aug. 24 after storms in the Gulf Coast delayed imports, the Energy Information Administration reported on Wednesday.
Gasoline stocks dropped 3.6 million barrels, bringing them to a record low of just 20 days of supply.
Although crude oil stocks remain well above historic norms, some analysts have forecast global supply could struggle to keep pace with demand later this year unless the Organization of the Petroleum Exporting Countries raises oil production.
“Notwithstanding the potential for a global credit crunch to erode oil demand growth, we maintain our base case view that the market remains fundamentally well supported by non-OECD demand growth and production restraint by OPEC,” a Goldman Sachs JBWere Investment Research report said.
OPEC officials have repeatedly said the market is well supplied, and put part of the blame for high prices on a lack of fuel supplies from consumer nation refineries.
“We continue to see a progressive erosion in crude stock going forward on weaker imports ahead, be it due to lower procurement or OPEC supply cuts,” said Harry Tchilinguirian, senior oil market analyst at BNP Paribas.
On Wednesday, Venezuelan Oil Minister Rafael Ramirez said global oil inventories remained above average levels, and that the producer group should stick to current output levels when it meets next on Sept. 11 in Vienna.
His comments echoed those of other OPEC ministers, including Secretary-General Abdullah al-Badri.
Speaking on Tuesday, Badri said fallout from the crisis in US subprime loans was blurring the demand picture.
Oil has held up well compared to other commodities, but the US benchmark has fallen from an all-time high of $78.77 on Aug. 1 as some investors worry that a global credit crunch will take its toll on the wider economy and erode oil demand.
MF Global Energy Group analyst Edward Meir cautioned against reading too much into the latest US gasoline data.
“Despite the hand-wringing, we would not get too concerned about gasoline right now, as refineries are shifting production to heating oil and distillates, both of which are starting to build,” he said.
“Let’s not forget gasoline imports either; these will continue to play an important role in the US energy equation. Moreover, the US driving season is officially ending after one ‘last hurrah’ this coming weekend.”
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