By Sonali Paul

MELBOURNE (Reuters) – Oil prices rose on Thursday, extending strong gains overnight with fuel demand growing and crude stocks declining as production remains hampered in the U.S. Gulf of Mexico after two hurricanes.

A wider switch to risk assets supported the market as worries about China Evergrande’s possible default and potential fallout for the second largest economy in the world eased.

U.S. West Texas Intermediate (WTI) crude futures rose 13 cents, or 0.2%, to $72.36 a barrel at 0143 GMT, while futures rose 17 cents, or 0.2%, to $76.36 a barrel.

Both benchmark contracts jumped 2.5% on Wednesday after data from the U.S. Energy Information Administration showed stocks fell by 3.5 million barrels to 414 million barrels in the week to Sept. 17, the lowest since October 2018, in a bigger drawdown than analysts had expected. [EIA/S]

“Oil fundamentals continue to be constructive in particular the U.S.,” ING commodities analysts stated in a note.

EIA data revealed that East Coast refinery usage rates increased to 93% as a result of high fuel demand and the removal of travel bans. It was also their highest level since May 2019.

ANZ Research said market sentiment is also being supported by surging prices.

In a note, ANZ analysts stated that a shortage in gas might encourage utilities to switch to oil if the winter proves to be more cold.

The U.S. Federal Reserve indicated that rates could rise next year faster than predicted, causing oil prices to soar. As the dollar strengthens, oil prices fall. This is because it makes oil more costly for other currency holders.