Inflation rising at slower than expected pace effectively eased crude trader's earlier fears about demand ruination, enough for the commodity on Wednesday to settle at the highest level in a week.
Crude was also buoyed by the U.S. Energy Information Administration reporting that a drop in prices at the pump resulted in implied gasoline demand jumping 6.81 percent, bringing the four-week average up 3.08 percent from the previous week and above the same week for 2020.
West Texas Intermediate settled up $1.43 to $91.93 per barrel, while Brent settled up $1.09 to $97.40 per barrel.
Supply concerns on a global scale also eased somewhat on Wednesday with the news that Transneft resumed flows on Russia's Druzhba pipeline; this, combined with the EIA's disclosure that crude inventories rose by over 5 million barrels last week caused Ed Moya, senior market analyst at Oanda, to remark, "Crude demand isn't roaring here and as production nears the return to pre-pandemic levels, the oil market isn't looking so tight anymore."
Also, Russian oil flows to Central Europe resumed on Wednesday after Hungary's sole refiner, MOL, paid transit fees owned to Ukraine; however, the payment agreement only covers flows to Slovakia and Hungary, not the Czech Republic.
Ukraine had suspended Russian oil flows to parts of Central Europe since early this month because western sanctions prevented it from receiving transit fees from Moscow.
Given that all of these developments run contrary to the familiar prediction of global tightness causing havoc in many parts of the world this winter, analysts on Wednesday took time to reassess the much-maligned recent move by the Organization of the Petroleum Exporting Countries (OPEC) to raise output by only 100,000 barrels per day (bpd).
Francesco Martoccia, an analyst at Citigroup Inc., said, "The latest agreement is actually a fair deal."
Paul Horsnell, head of commodities research at Standard Chartered, added, "The decision was a glance at the downside, and a greater concern with prices going to $80 rather than $120; so 100,000 barrels fitted well, given the constraints."
Several analysts also assessed the elements influencing Wednesday's crude trading patterns – including a dip in the U.S. dollar – and did not like what they saw.
With regards to the dollar falling over 1 percent against a basket of other currencies, Eli Tesfaye, senior market strategist at RJO Futures, remarked, "There is not a lot of bullish strength in the market; with this kind of dollar weakness you should be seeing a $2-$3 increase in crude and you're not seeing that."