Oil Prices Hit Highest Level since mid-March

Oil prices rose for a third day on Wednesday as US crude inventories fell more than expected, amid easing of pandemic-related restrictions in the United States and parts of Europe, increasing oil demand.

Brent crude was up 1.2% to $69.68 a barrel, while the US West Texas Intermediate (WTI) crude rose 1% to $ 66.38 a barrel, to hit their highest levels since mid-March in daily trading.

The Energy Information Administration said that US crude inventories fell 8 million barrels in the week ending April 30 to 485.1 million barrels, beating expectations for a decrease of 2.3 million barrels.

Exports increased to 4.1 million barrels per day, the largest number since March 2020, and refining production reached its highest level since that month.

The rise in oil prices to their highest in nearly two months was supported by the launch of the COVID-19 vaccine. In the United States, more than 40% of adults have received at least one jab, and more than 50% of adults in the UK received the first shot as well.

Business activity in the Eurozone accelerated last month as the dominant service industry in the bloc ignored renewed closures and returned to growth.

"The partial lifting of movement restrictions, the expectation of tourism to return in the near future, and the lure of the $70 mark of psychological significance have all contributed to the price increase," said Eugene Weinberg, an analyst at Commerzbank.

This has compensated the reduced fuel demand in India, the world's third largest oil consumer, which is battling a spike in the number of COVID-19 cases.

"If we are ultimately going to see a national lockdown being imposed, this is likely to hurt sentiments," ING Economics said.