- US gasoline inventories fell by 2.7 million barrels last week.
- Oil got support from a report of a delay in the planned OPEC+ output increase.
- The dollar has paused its recent rally amid mixed US economic reports.
Oil prices gained over 2% on Wednesday and continued to climb on Thursday after an unexpected drop in gasoline and crude inventories. At the same time, a report that OPEC+ might delay its planned production increased boosted prices.
Oil futures (Source: ICE)
Data on Wednesday revealed that gasoline inventories fell by 2.7 million barrels last week. Meanwhile, estimates had shown a 600,000 barrel increase. At the same time, crude inventories fell by 515,000 barrels, missing forecasts of a 2.3 million barrel increase. The inventories draw indicated robust demand last week. However, it also came from a decline in oil imports.
Meanwhile, oil also got support from a report of a delay in the planned OPEC+ output increase. OPEC+ members have been producing below their usual levels to support oil prices. However, the organization had planned to increase production in December. This might not happen because demand, especially in China, remains soft. At the same time, supply is high. Therefore, an early increase in production could weigh on prices. Analysts believe the organization will delay for a month or two.
Elsewhere, the dollar eased in the previous session, making oil cheaper for foreigners and increasing demand. The dollar has paused its recent rally amid mixed US economic reports. At the same time, market participants are locking in profits ahead of crucial employment data and the presidential election.
Data this week revealed a bigger-than-expected drop in job vacancies, indicating soft demand for labor. However, private employment in the US came in well above estimates. Meanwhile, US consumer confidence jumped, showing a bright economic outlook. However, the US GDP report showed an expansion of 2.8%, compared to estimates of 3.0%. The cumulative effect was a pause in the dollar’s rally. Meanwhile, bets for a November Fed rate cut remained mostly unchanged.
At the same time, traders are taking to the sidelines ahead of crucial data on inflation and US monthly employment. The NFP report might significantly impact Fed rate cut expectations. Economists expect slower job growth in October, with the unemployment rate holding at 4.1%.
Furthermore, the looming US election is keeping investors on edge. The uncertainty regarding the outcome has created caution, with most preferring safer assets like gold.
