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Oil prices rose 2 per cent on Wednesday, after U.S. distillate inventories posted a large drawdown and refining activity picked up, boosting hopes for rising fuel demand.

The market remained concerned, however, about India’s surging coronavirus cases.

Brent crude futures were up $1.23, or 1.9 per cent, to $67.65 a barrel by 10:53 a.m. EDT. U.S. West Texas Intermediate (WTI) crude futures rose $1.31, or 2.1 per cent, to $64.25 a barrel.

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U.S. crude inventories rose by 90,000 barrels last week to 493.1 million barrels, the Energy Information Administration said on Wednesday. Analysts had expected a 659,000-barrel rise.

Distillate stockpiles fell by 3.3 million barrels in the week, and refining capacity use rose to 85.4 per cent on the week.

“The market is taking this as a positive,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “Gasoline demand week-over-week was down a smidge, so that was a bit disappointing, but it was offset by the fact that we had a big leap in distillate demand.”

U.S. bank Goldman Sachs said on Wednesday it expected “the biggest jump in oil demand ever,” at 5.2 million barrels per day (bpd) over the next six months, as vaccination campaigns accelerate in Europe and travel demand climbs.

Goldman said easing international travel restrictions in May would hike jet fuel demand by 1.5 million bpd.

OPEC+ this week decided to stick to plans for a phased easing of oil production restrictions from May to July, an indication that the group is confident that global demand will recovery.

“The market is supported by the general belief that the COVID endgame is in sight,” said Tamas Varga, analyst at PVM Oil associates.

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In a report by OPEC+ experts, the group forecast global oil demand in 2021 would grow by 6 million bpd, after demand plunged by 9.5 million bpd last year.

In India, the world’s third-largest oil consumer, the COVID-19 death toll surged past 200,000 and infections have climbed by more than 300,000 cases a day for a week.

Rystad lowered its global oil demand forecast for April by nearly 600,000 bpd and May by 915,000 bpd due to the new wave of infections in India.

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