Peter Nurse   

Investing.com – Oil prices rose on Thursday. This was due to the Federal Reserve’s confidence that the U.S. economy is strong and also the sharpest weekly fall in inventories since September. 

U.S. crude futures had traded 0.7% higher by 8:45 ET (1340 GMT) and were at $71.39/barrel, while contracts rose 0.7% up to $74.41. 

U.S. The price of gasoline RBOB Futures was up 0.7% to $2.1412 per gallon.

At the end of Wednesday’s two-day meeting, the Fed stated that it will accelerate the rate at which its central bank stops its asset-buying program to combat inflation. This was because the Fed believes the U.S. economy is strong enough to withstand the tighter policies.

The closing was close to its highest point on Wednesday, giving a boost to most of the risky assets. This was not an exception in the oil market.

Adding to the positive sentiment was Wednesday’s report by the U.S. , which indicated that crude stockpiles shrunk by 4.6 million barrels last week, the largest draw in inventories for three months as demand for oil in the world’s largest economy remained strong. 

“The EIA data was … extremely bullish,” said Phil Flynn, an energy analyst at The PRICE Futures Group. “A very big draw considering that it would have been larger except for a 2 million barrel release from the SPR back into commercial inventory. That puts crude supply about 7% below the five-year average for this time of year.”

That said, traders are still keeping a wary eye on the spread of the Covid-19 virus, and the Omicron variant in particular, even after these strong U.S. numbers suggest the country’s drivers are not too concerned. 

South Korea, South Africa, and Britain reported records daily Covid-19 case numbers on Wednesday. The International Energy Agency’s monthly report, earlier in the week, indicated that there is a possibility of a surplus supply next year.

Barbara Lambrecht, analyst at Commerzbank (DE): stated in a note that she was skeptical about the news that good oil market sentiment will carry over into the first trimester.