(Bloomberg) – Oil extended its gains a day after US crude inventories fell the most since September as the dollar fell.

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New York futures gained as much as 2.3% on Thursday, with rising equity markets and a weaker dollar improving commodity appeal. The U.S. Department of Energy on Wednesday reported a drop in crude inventories of 4.58 million barrels, as the Fed’s decision to slow inflation by ending its asset purchase program propelled the S&P 500 near its all-time high.

“We still have an offer in the market for yesterday’s EIA report, which deserves a lot of love,” said Bob Yawger, director of the futures division at Mizuho Securities USA. The report alone gives the markets a reason to trade sharply lower in the coming days, he added.

Conflicting signals on supply and demand have seen oil swing between gains and losses this week. While the outlook for consumption appears to be deteriorating as China, the world’s largest oil importer, limits vacation travel to try to contain the omicron, the picture looks more positive in the United States. The International Energy Agency said this week that the market was already in surplus, but The Vitol Group, the world’s largest independent oil trader, expects prices to rise next year due to ‘a lack of new investment in production.

Read more: Leading oil trader Vitol expects high prices and volatility in 2022

Crude cut some of its gains earlier Thursday after the Bank of England unexpectedly raised interest rates for the first time since the start of the pandemic.

The U.S. government report, which flies in the face of the IEA’s outlook, also showed exports climbed above 3 million barrels per day, with traders pushing barrels out of the country to avoid the impact. year-end taxes on inventory.

“On the one hand, we had extremely positive data from yesterday’s EIA report, strong implicit oil demand and large drawdowns from crude and petroleum products inventories,” said Giovanni Staunovo, commodities analyst. at UBS Group AG. “And the other piece was the Fed, which backed all of the risky assets on Thursday.”

The increase in demand for gasoline in the United States ahead of the holiday season suggested that concerns about the new variant of the virus were not preventing drivers from driving. According to data from consultant Kayrros, global onshore crude inventories are also declining, driven by drawdowns in Europe.

“It will all depend on Omicron and possible blockages,” said Hans van Cleef, senior energy economist at ABN Amro. “But with the holidays coming and people coming together, I hope these boosters will help and prevent a rapid rise in infections. But the risk of more infections is high and so my short-term assumption would be for more prices. low instead of higher. “

At the same time, the physical crude market in Asia weakened as the crackdown on Chinese private processors and weakening refining margins reduced demand. Russian ESPO’s spot premium over the Dubai benchmark has fallen to a minimum since August, while those of Sokol and Al-Shaheen have also fallen over the past month.

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