Oil has climbed for the second consecutive day, buoyed by encouraging indications of increased demand from US refineries

Oil prices climbed for a second consecutive day on Thursday, driven by optimism surrounding the anticipated uptick in demand in the United States, the world’s largest oil consumer. This optimism stems from expectations of refineries’ efforts to resume operations following recent outages, coupled with the weakening of the dollar.

At 0740 GMT, Brent crude futures increased by 34 cents, or 0.4%, reaching $83.37 a barrel, while U.S. West Texas Intermediate crude futures saw a gain of 37 cents, or 0.5%, reaching $78.28 a barrel.

“Oil prices have displayed resilience, with market participants eyeing a potential retest of its year-to-date peak following the February rally,” remarked Yeap Jun Rong, a market strategist at IG, citing geopolitical tensions as a supportive factor.

However, Yeap also cautioned that gains might be somewhat tempered for the time being, pointing to higher-than-anticipated inventory builds in U.S. crude stocks reported by the American Petroleum Institute (API) overnight, leading some to adopt a wait-and-see approach ahead of the Energy Information Administration (EIA) figures.

According to API figures, crude stocks increased by 7.17 million barrels in the week ending Feb. 16. While gasoline inventories rose, distillate fuel inventories declined.

The recent climb in U.S. crude inventories can be attributed to disruptions at major refineries, resulting in utilization rates plummeting to their lowest levels in two years. Nevertheless, these plants are gradually resuming operations.

BP’s 435,000 barrel-per-day refinery in Indiana, the largest in the U.S. Midwest, is set to return to full production in March after experiencing a power outage since Feb. 1. Similarly, TotalEnergies’ 238,000-bpd refinery in Port Arthur, Texas, is in the process of restarting following a weather-related power outage.

Analysts anticipate that U.S. refinery run rates rose to 81.5% last week, up from 80.6% of total capacity the previous week, according to a Reuters poll.

Investors are eagerly awaiting the official inventory data from the U.S. Energy Information Administration (EIA), scheduled for release at 1600 GMT on Thursday, albeit delayed by a U.S. holiday.

Additionally, oil prices received support from a weakening U.S. dollar, making oil more affordable for traders holding other currencies. The dollar index, measuring the greenback against six major peers, dropped 0.3% to 103.713 at 0740 GMT.

“The continued retreat of the U.S. dollar for the fourth consecutive session may further bolster the short-term attractiveness of oil,” noted Yeap.

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