Oil prices climbed for a fourth day in a row to hit their highest in two and a half weeks today with US crude, heating oil and jet fuel stocks growing tighter just as a wintry blast hits the US.
Brent crude futures were 32 cents, or 0.4%, higher at $82.52 this afternoon, extending gains of around 2.7% from the previous session but losing some steam from earlier in the session.
US West Texas Intermediate (WTI) crude futures were up 33 cents, or 0.4%, at $78.62 a barrel.
Both benchmark contracts jumped yesterday after government data showed US crude inventories fell by much more than analysts had expected, posting a drop of 5.89 million barrels for the week ending on December 16.
Distillate stocks, which include heating oil and jet fuel, also declined, going against expectations for a build, in what PVM analyst Stephen Brennock called "an overwhelmingly price-supportive stock report from the EIA".
The falling stockpiles come as demand for heating oil is set to soar with a powerful winter storm hitting the US, with sub-zero wind chills expected as far south as Texas and record-breaking lows forecast for Florida.
At the same time, airlines cancelled nearly 2,000 US flights scheduled for today and tomorrow, disrupting Christmas travel plans for thousands and sending a bearish signal for travel fuel demand.
Also keeping a lid on prices are demand worries stemming from China's Covid-19 surge and fears of a global recession.
China may be struggling to keep an accurate count of Covid infections as it experiences a big spike in cases, a senior World Health Organization official said this week , amid concerns about a lack of data from the country.
A Shanghai hospital has told its staff to prepare for a "tragic battle" with Covid-19 as it expects half of the city's 25 million people will get infected by the end of next week, as the virus sweeps through China largely unchecked.
