Oil hits seven-week high after US production rise
OIL rose to a seven-week high after a US government report showed that refinery operating rates climbed to the highest level since October, bolstering demand.
Refinery utilisation increased 0.7 of a percentage point to 81.9pc last week, the US Energy Department said.
Analysts had forecast that there would be no change. Inventories of crude oil climbed 4.03 million barrels, more than three times what was estimated.
"Refinery run rates increased strongly, which should whittle down the huge oversupply of crude oil," said Sean Brodrick, an analyst with Weiss Research in Florida. "This market just wants to go higher, even when there is bearish news."
Crude oil for April delivery increased $1.31, or 1.6pc, to $80.99 a barrel yesterday on the New York Mercantile Exchange by the time European markets closed. Futures reached $81.23, the highest level since January 12. Oil traded at $80 a barrel before the release of the inventory report.
Total US fuel demand, averaged over the past four weeks, was 19.3 million barrels, up 3pc from a year earlier, the department said.
"We're seeing a little demand improvement, which gives impetus to higher prices," said Chip Hodge, who oversees a $9bn (€6.6bn) natural-resource bond portfolio as senior managing director at MFC Global Investment Management in Boston. "There continues to be optimism that economic growth will accelerate, and with it demand."
Nationwide stockpiles of crude oil rose 1.2pc to 341.6m, the highest level since August, the report showed. It was the biggest gain since the week ended July 24.
An increase in oil supplies on the US west coast was responsible for much of the nationwide gain, the report showed. Stockpiles there surged 2.31 million barrels to 51.2 million, the highest level since December. The region's distribution system is isolated from the rest of the country.
Oil also advanced as the dollar weakened, increasing the investment appeal of commodities. The common currency rose after Greece approved an additional €4.8bn of deficit cuts. The dollar traded at $1.3726 per euro, down 0.8pc from $1.3615 yesterday.
Other factors affecting oil prices were the capture of a Saudi Arabian-flagged product tanker by pirates in the Gulf of Aden on Monday. The tanker, with a crew of 14, was heading for the Red Sea port of Jeddah, according to the European Union Naval Force.