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Oil rises on expectation high natural gas to drive switch for heating

  • API reveals U.S. crude shares up, gas shares down for final week
  • U.S. 2021 crude output seen falling greater than forecast – EIA
  • OPEC trims 2021 demand f’solid, however says gas value surge could assist

TOKYO, Oct 14 (Reuters) – Oil costs rose on Thursday, reversing earlier losses, on expectations that high natural gas costs as winter approaches could drive a switch to oil to meet heating demand wants.

Brent crude futures gained 28 cents, or 0.3%, to $83.46 a barrel at 0107 GMT after falling 0.3% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures climbed 22 cents, or 0.3%, to $80.66 a barrel, after dropping 0.3% yesterday.

“Investors bet that surging gas prices will encourage power generators to switch to oil as winter demand season is approaching,” stated Hiroyuki Kikukawa, basic supervisor of analysis at Nissan Securities.

Prices have been additionally supported by issues about provide tightness after the U.S. Energy Information Administration (EIA) stated on Wednesday that crude oil output within the United States, the world’s greatest producer, goes to decline in 2021 greater than beforehand forecast thought it can bounce again in 2022. learn extra

“The current tightness in the crude market and near-term outlook for seasonal demand increases lent support to investors’ sentiment, outweighing a bigger-than-expected build in the U.S. crude inventories and weaker demand forecast by OPEC,” Kikukawa stated.

The American Petroleum Institute (API) stated late on Wednesday that U.S. crude stockpiles rose by 5.2 million barrels for the week ended Oct. 8, in accordance to market sources who noticed the API knowledge.

The API additionally reported gasoline inventories fell by 4.6 million barrels and distillate shares fell by 2.7 million barrels, the sources stated.

Analysts in a Reuters ballot anticipated crude inventories to rise by 700,000 barrels.

The Organization of the Petroleum Exporting Countries (OPEC) trimmed its world oil demand progress forecast for 2021 in its newest month-to-month report on Wednesday, whereas sustaining its 2022 view.

However, the producer group stated rising natural gas costs may enhance demand for oil merchandise as finish customers switch fuels. learn extra

The EIA will launch its stock report later on Thursday at 11 a.m. EDT (1500 GMT).

Reporting by Yuka Obayashi; Editing by Christian Schmollinger

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