(Bloomberg, April 10) — Oil posted its greatest one-day gain in a year. Investors embraced risk assets while industry estimates indicated a decline in U.S. stockpiles.

West Texas Intermediate gained 3.8% after Tuesday’s rally and traded at above $81 per barrel. People familiar with figures said that the industry-funded American Petroleum Institute stated that inventory fell by around 1 million barrels. However, gasoline stocks increased while crude oil dropped at Cushing’s key storage facility.

Crude’s rally on Tuesday to the highest close since Nov. 11 came alongside gains in raw materials and equities after Federal Reserve Chair Jerome Powell sought to reassure investors the central bank can rein in inflation without damaging the U.S. economy. He could succeed in securing oil demand.

As concerns over the pandemic and the impact of the Omicron variant have subsided, oil has surged in the first days of 2012. However, oil stockpiles are showing a wider decline, suggesting a tighter marketplace. Several OPEC+ producer have also experienced disruptions in their supply. 

“There are a lot of supply factors and omicron fears are ebbing,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “The market will remain tight for a while. Wherever the market is right now has just started to reflect oil’s fair value and there is still more to run.”

The Energy Information Administration will provide data later Wednesday on U.S. crude oil stocks. They would confirm that there was a decline, which would make it the seventh consecutive fall.

Brent’s pricing structure reflects rising concern over supplies, with the market in backwardation, a bullish pattern marked by near-term prices commanding a premium to those further out. The benchmark’s prompt spread was 66 cents a barrel on Wednesday, up from 41 cents at the start of the month.

Powell told Congress that Powell was on the right track to increase interest rates and shrink its enormous balance sheet in his confirmation hearing. The median prediction of Bloomberg economists is that U.S. consumer price increases will be 7% by Wednesday.

However, there are still concerns about the omicron virus, particularly in China. Authorities have adopted a Zero-Covid strategy to eradicate it through lockdowns. Goldman Sachs Group Inc (NYSE:). cut its forecast for the nation’s economic growth this year to 4.3% due to the increased difficulty of containing the more-contagious variant.

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