By Barani Krishnan
Investing.com – Oil prices rose about 2% on Wednesday, helped by bullish U.S. inventory and a Goldman Sachs (NYSE:) forecast for $80 a barrel within the next six months, even as third-largest crude importer India remained devastated by one of the world’s worst Covid outbreaks.
“The market is focused on the U.S. narrative for energy demand and Goldman Sachs’ high-flying forecast for oil prices,” said John Kilduff, founding partner at New York energy hedge fund Again Capital. “These have helped fudge the global story for Covid and oil for the moment, and we’ll have to see if the momentum can be sustained.”
India suffered on Tuesday its worst day yet of the pandemic, as both new infections and deaths broke previous records while crematoriums in capital New Delhi became so overloaded with bodies that makeshift cremation pyres were erected on spare patches of land.
Alex Yap, senior oil analyst at S&P Global (NYSE:) Platts Analytics, said he expected refinery run rates in India “easing to some extent in April and beyond, given the increase in the number of pockets witnessing lockdowns and rising infection numbers” from Covid.
New York-traded , the benchmark for U.S. crude, was up $1.17, or 1.9%, to $64.11 per barrel by 12:25 PM ET (16:25 GMT).
London-traded , the global benchmark for crude, rose $1.16, or 1.8%, to $67.03.
Oil rallied after the U.S. Energy Information Administration reported that in the country only rose by 90,000 barrels last week, compared with analysts’ expectations for a build of 659,000 barrels.
, which include diesel and , fell 3.342 million barrels for the week ended April 23, against expectations for a draw of 648,000 barrels, the EIA data showed.
inventories rose by 92,000 barrels last week the EIA said, compared with expectations for a build of 508,000 barrels.
The rally was also underpinned by a feverishly-bullish commodity price forecast issued by Goldman Sachs on Tuesday, where the Wall Street bank forecast Brent at $80 a barrel and WTI at $77 by the end October.
“We expect the biggest jump in oil demand ever, a 5.2 million barrels per day rise over the next six months,” Goldman Sachs said, citing acceleration of vaccinations in Europe and an unleashing of pent-up travel demand.
The easing of international travel restrictions in May will lead global jet demand to recover by 1.5 million bpd, it added.
Closer examination of the EIA inventory data also showed there was less oil flowing into the market at the moment compared to a year ago, prompting the agency to revise down production for the just-ended week by 100,000 barrels per day to below the key 11 million bpd mark.
“It’s the Permian, if you ask me,” Kilduff said, referring to the largest U.S. shale oil basin, which has been struggling to recover in production in the aftermath of the Covid demand-decimated era that took U.S. crude prices to historic negative prices of minus $40 per barrel in April 2020.
The Permian is about 250 miles wide and 300 miles long, spanning parts of west Texas and southeastern New Mexico and includes the highly-productive Delaware and Midland sub-basins. The one-time prolific shale basin is operating less than half of the oil-drilling rigs it operated a year ago, data shows.
“A year ago, U.S. crude production, as a whole, was a record 13.1 million barrels daily,” Kilduff noted. “Now, we are struggling to get above 11 million barrels a day. That shows the spigots at the Permian aren’t fully open. This is despite the number of oil rigs on the ground having doubled over the last year. “
The U.S. , a measure of future production, stood at 343 last week versus a mid-August record low 172.
by : Investing.com