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- West Texas Intermediate and Brent oil prices stepped up to three-week highs on Wednesday.
- US data showed weekly oil supplies fell by 5.9 million barrels, outstripping expectations of a drawdown of 2.9 million barrels.
- The short-term picture for oil appears favorable but the long-term view is dampened, says one analyst.
- See more stories on Insider's business page.
Oil prices hit a three-week high Wednesday, with a drop in weekly US oil supplies coming after OPEC drew higher its 2021 demand outlook for the commodity.
West Texas Intermediate crude and Brent crude, oil's international benchmark, each marked their highest points since March 18 and built on gains made in the previous session.
Oil found support after the Energy Information Administration on Wednesday said US commercial crude inventories fell by 5.9 million barrels to 492.4 million barrels in the week ended April 9. The decline was more than anticipated, with analysts polled by Reuters expecting a fall of 2.9 million barrels. That drop also came alongside a pickup in activity among oil refiners.
West Texas Intermediate crude gained 4.9% to trade at $63.13 per barrel. Brent crude rose 4.5% to $66.55 per barrel.
The EIA figures were released a day after OPEC in its April report raised its outlook for global oil demand this year to 94.46 million barrels of oil per day from its March projection of 96.25 million barrels of oil per day.
The market's leading oil group said fiscal stimulus from the US government as part of COVID-19 recovery efforts and accelerating growth in Asia will help feed demand following a collapse last year when the coronavirus pandemic took hold worldwide.
"Here we are now getting a global economic recovery. It's uneven but it's definitely happening. Supply is actually low and, of course, OPEC is still not producing their normal numbers so that's why you're getting a rally in oil," Eric Diton, president and managing director The Wealth Alliance, an investment advisory firm, told Insider on Wednesday.
"So, short-term bullish on oil as we continue this economic recovery, but the long-term story of oil is not a good one as the world finally decides to embrace green energy and deal with carbon," he said.
