Title: Oil rises towards $75 as U.S. demand and Fed outweigh virus concern

Dec 16, 2021 04:30AM ET

By: AnalysisWatch

Oil prices rose towards $75 on Thursday, supported by record-breaking demand in the US and falling crude inventories, even as the spread of the Omicron coronavirus threatens to slow consumption worldwide.

Crude oil and other risk assets such as equities also got a boost after the US Federal Reserve gave an upbeat economic outlook that lifted investor sentiment even as the Fed announced a long-awaited end to its monetary stimulus.

By 0915 GMT, Brent crude was up 62 cents, or 0.8%, at $74.50 a barrel, while U.S. West Texas Intermediate (WTI) crude was up 65 cents, or 0.9%, at $71.52.

The U.S. Energy Information Administration (EIA) reported a 4.6 million barrel drop in crude inventories on Wednesday, above analysts' forecasts.

Oil demand has rebounded from last year's slump in 2021, and the EIA also said products delivered by refineries, an indicator of demand, rose to 23.2 million barrels a day last week.

"These numbers point to a healthy economic backdrop," said Tamas Varga of oil broker PVM.

Although the US Federal Reserve's announcement led to a jump in both oil and stock prices, the removal of economic support and the Omicron crisis are the two biggest headwinds currently facing the oil market, he added.

Concerns about the virus were limiting gains; the UK and South Africa were reporting record numbers of COVID-19 cases every day, while many companies around the world were asking employees to work from home, which could limit demand in the future.