Oil tracked equities higher in Asia, but an outlook for weaker refinery demand held gains in check.
Futures in New York advanced 0.5%, after dropping 2.9% to a three-week low on Wednesday. The S&P 500 climbed to a fresh all-time high, boosting sentiment across risk assets, while a sixth week of declining crude inventories gave confidence that the Covid-induced supply glut continues to ease. Gasoline and distillate stocks also fell.
Expectations that refinery demand for crude will weaken in the fall saw futures fall the most since since July 30 in Wednesday’s session. Many U.S. refineries will soon halt operations to conduct maintenance to coincide with a seasonal downturn in fuel consumption. It’s a reminder to investors that both oil and gasoline demand, already depressed from a pandemic-driven lull in travel, may further weaken. Adding to the headwinds, the U.S. dollar rose the most in two weeks, reducing the appeal of commodities priced in the currency.
