By Yuka Obayashi

TOKYO, Reuters – On Thursday oil prices rose, reversing losses from previous weeks. This was due to expectations that higher prices in winter may prompt a shift to oil for heating needs.

Futures fell 0.3% on Wednesday and gained 28cs to $83.46/barrel at 0107 GMT.

U.S. West Texas Intermediate crude oil futures rose 22 cents or 0.3% to $80.66 per barrel after falling 0.3% last day.

Hiroyuki Kukawa, Nissan Securities general manager of research said that “investors believe that rising gas prices could encourage power generators switch to oil as winterdemand season approaches.”

The U.S. Energy Information Administration (EIA), which stated Wednesday that US crude oil production, the largest global producer of crude oil, will decline more in 2021 than originally forecasted. This is in spite of concerns over supply tightness.

Kikukawa stated that the current tightness of the crude oil market and the near-term outlook to seasonal demand growths lent support for investors’ sentiment. This was in contrast with a larger-than-expected increase in inventories and weaker forecast by OPEC. 

According to API data, the American Petroleum Institute (API), crude oil stocks in the United States rose by 5.2 Million barrels during the week ending Oct. 8. Market sources that saw API data said this.

Sources also stated that the API had reported that gasoline inventories declined by 4.6 millions barrels and that distillate stock fell by 2.75 million barrels.[API/S]

A Reuters poll showed that analysts expected oil inventories to increase by 700,000.[EIA/S]

In its most recent monthly report, the Organization of the Petroleum Exporting Countries(OPEC) lowered its forecast of world oil demand growth for 2021. However, it maintained its view of 2022.

According to the producer group, rising natural gas prices might increase oil product demand as end users shift fuels.

Later on Thursday, the EIA will publish its inventory report (1500 GMT)