Oil climbs on drop in U.S. oil stockpiles, solid demand outlook

By Sonali Paul
MELBOURNE, May 12 (Reuters) - Oil prices rose on Wednesday,
extending overnight gains, after industry data showed a drop in
U.S. crude inventories, which reinforced OPEC's robust demand
outlook, and as the shutdown of the biggest U.S. fuel pipeline
headed into a sixth day.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose
21 cents, or 0.3%, to $65.49 a barrel at 0013 GMT, adding to a
36 cent rise on Tuesday.
Brent crude LCOc1 futures climbed 15 cents, or 0.2%, to
$68.70 a barrel, adding to a 23 cent gain on Tuesday.
"Crude oil gained as investors continue to bet on a bright
outlook for demand. A weak U.S. dollar also lent support," ANZ
Research said in a note.
Data from the American Petroleum Institute industry group
showed U.S. crude oil stocks fell by 2.5 million barrels in the
week to May 7, according to two market sources.
The drop was slightly less than expected. Eight analysts
polled by Reuters had estimated, on average, that crude stocks
fell by 2.8 million barrels. The drawdown came before the Colonial Pipeline was hit by a
cyberattack last Friday which forced the pipeline, which
transports more than 2.5 million barrels a day of fuel, to shut
down. The operator said it hopes to restart a large portion of
the network by the end of the week.
In the meantime, the market remained on edge, as gasoline
stations from Florida to Virginia began running out of fuel on
Tuesday as drivers rushed to top up their tanks and pump prices
rocketed. U.S. unleaded gasoline prices hit an average $2.99 a gallon,
the highest since November 2014, the American Automobile
Association said. Oil prices were also supported by the latest outlook from
the Organization of the Petroleum Exporting Countries (OPEC),
which stuck to a forecast for a strong recovery in world oil
demand in 2021 with growth in China and the United States
outweighing the impact of the coronavirus crisis in India.
OPEC said it expects demand to rise by 5.95 million bpd this
year, unchanged from its forecast last month. However, it cut
its demand outlook for the second quarter by 300,000 bpd due to
soaring COVID-19 infections in India.
"India is currently facing severe COVID-19-related
challenges and will therefore face a negative impact on its
recovery in the second quarter, but it is expected to continue
improving its momentum again in the second half of 2021," OPEC
said in its monthly report.