Oil prices shrugged off a large implied slump in U.S. gasoline consumption last week and rallied on Thursday morning amid continued unrest in oil-rich Kazakhstan.
As of 9:55 a.m. EST on Thursday, WTI Crude prices had topped $80 a barrel and traded at $80.05, up 2.85%. Brent Crude was up by 2.26% to $82.59. Both benchmarks were trading at their highest level since the end of November before the emergence of the Omicron COVID variant spooked markets.
Oil extended on Thursday gains from the previous three sessions, despite the fact that the U.S. Energy Information Administration (EIA) reported on Wednesday a large decline in implied gasoline demand in the United States. In gasoline stocks, the EIA estimated an inventory build of 10.1 million barrels for the week to December 31, 2021. The bearish fuel demand figure offset the more bullish crude inventory decline of 2.1 million barrels for the final week of 2021.
“The build in gasoline stocks was the largest weekly increase seen since April last year,” ING strategists Warren Patterson and Wenyu Yao said on Thursday.
The bearish U.S. data was offset by continued unrest in Kazakhstan, where protests and clashes over increased fuel prices have been taking place this week. The clashes haven’t affected any oil production in the country yet.
Kazakhstan produces around 1.6 million barrels per day (bpd) of crude oil, and it was called out by the OPEC+ meeting on Tuesday for low compliance with the cuts. For February, the quota for Kazakhstan is 1.589 million bpd, per the group’s decision and production table.
On Thursday, Russia sent paratroopers in Kazakhstan to help squash the protests that have resulted in deaths and injuries after Kazakhstan’s President Kassym-Jomart Tokayev called in forces from ally Russia.
Other bullish factors these days include the latest Bloomberg survey showing that OPEC added only 90,000 bpd to its production increase in December, against a 250,000-bpd rise in supply, which the cartel is entitled to under the OPEC+ deal. In addition, oil flows in North Dakota and Western Canada have been disrupted due to lower-than-normal winter temperatures.