Oil futures rose Thursday, extending gains scored the previous session after data showed a larger-than-expected drop in U.S. crude inventories.
West Texas Intermediate crude for February delivery rose 26 cents, or 0.5%, to $50.89 a barrel on the New York Mercantile Exchange. March Brent crude the global benchmark, was up 7 cents, or 0.1%, at $54.37 a barrel on ICE Futures Europe.
Crude on Wednesday shrugged off events in Washington when a violent mob disrupted the Congressional debate on the confirmation of Joe Biden as president from Jan. 20. Biden was confirmed in the early hours of Thursday morning after Democrats won control of Congress in two run elections for the Senate on Wednesday.
Oil had rallied Wednesday after the Energy Information Administration reported that U.S. crude inventories fell by 8 million barrels for the week ended Jan. 1. That compared with the decline of 1.2 million barrels forecast by IHS Markit analysts. The American Petroleum Institute on Tuesday reported a 1.7 million-barrel fall in crude supplies.
Earlier this week, Saudi Arabia surprised traders by announcing a unilateral production cut of 1 million barrels a day. That move is still providing a tailwind “because the oil market could tighten as a result in the first quarter, despite weaker demand due to tougher mobility restrictions in many consumer countries,” said Carsten Fritsch, analyst at Commerzbank, in a note.
Michael Tran, commodity strategist at RBC Capital Markets said the Saudi move “safeguards against a global absorption rate that could otherwise become inundated with barrels struggling to find a home, at least until demand improves further.
“If demand improves in the spring as many anticipate, the deeper cuts will prove expeditious from an oil storage surplus standpoint,” he said in a Thursday note.