Oil futures headed higher on Thursday, looking to recoup a portion of the losses suffered a day earlier after inflation data sent bond yields and the U.S. dollar soaring, and underlined fears of a potential release of crude from the Strategic Petroleum Reserve.

“The oil bulls are licking their wounds following the $3 selloff” on Wednesday, said Bjørnar Tonhaugen, head of oil markets at Rystad Energy, in a daily note.

West Texas Intermediate crude for December delivery
CL00,
+0.66%

CLZ21,
+0.66%

rose 37 cents, or 0.5%, to $81.71 a barrel on the New York Mercantile Exchange after posting a loss of 3.3% Wednesday. January Brent crude
BRN00,
+0.52%

BRNF22,
+0.52%
,
the global benchmark, was up 20 cents, or 0.2%, at $82.84 a barrel on ICE Futures Europe, a day after posting a decline of 2.5%.

Crude fell sharply Wednesday, breaking a three-day winning streak, after the October consumer price index showed a year-over-year jump of 6.2%, the strongest rate of inflation in nearly 31 years.

Oil was pressured as President Joe Biden “responded by giving top priority to reversing inflation, targeting the sharp rise in energy prices in particular,” said Carsten Fritsch, analyst at Commerzbank, in a note.

“To this end, he has tasked two bodies with discussing ways to reduce energy costs and to push back on market manipulation in the energy sector. One of the possible measures is bound to be the release of strategic oil reserves,” he said.

Read: ‘We’ll see lower prices’: Biden says passage of his agenda will tame inflation

The dollar soared Wednesday in reaction to the inflation data, as bond yields rose, sending the ICE U.S. Dollar Index
DXY,
+0.19%

to a more-than-15-month high. The index, which measures the currency against a basket of six major rivals, was up another 0.2% in Thursday dealings.

A stronger dollar can be a negative for commodities priced in the unit, making them more expensive to users of other currencies.

In a monthly report released Thursday, the Organization of the Petroleum Exporting Countries left its forecast for 2022 growth in oil demand unchanged at 4.2 million barrels a day, but trimmed its outlook for growth this year by around 160,000 barrels to 5.7 million barrels a day citing the effect of high prices.

That would put global oil demand at 100.6 million barrels a day in 2022, around 500,000 barrels a day above 2019 levels, while 2021 demand is seen at 96.4 million barrels a day.

Oil traders continued to digest Wednesday’s weekly data from the Energy Information Administration, which showed that domestic crude inventories, which exclude those in the Strategic Petroleum Reserve(SPR), rose by 1 million barrels in the week ended Nov. 5. That matched the average forecast of analysts polled by S&P Global Platts. The EIA also reported declines in gasoline and distillate stockpiles.

On Thursday, December gasoline
RBZ21,
+1.48%

tacked on 1.5% to $2.331 a gallon and December heating oil
HOZ21,
+0.09%

added 0.3% to $2.461 a gallon.

The SPR, meanwhile, saw a decline of 3.1 million barrels last week to 609.4 million barrels, according to the EIA, which had a footnote detailing that the number “includes non-U.S. stocks held under foreign or commercial storage agreements.”

“Although part of the planned SPR auctions that the U.S. had announced a long time ago — not part of the much discussed possibility of an extraordinary Biden intervention — the unexpected size of the…draw rang some bearish bells on trading floors, adding to inflation concerns,” said Tonhaugen.

Combined with the year-over-year jump in U.S. consumer inflation, “the market is torn between current tightness in crude markets and negative risks to demand from monetary policy, which would likely strengthen the [U.S. dollar] and negatively affect emerging markets purchasing power for, among other goods, oil,” he said.

Looking ahead, the next market-moving factor for oil may be the weekly update on the number of active U.S. oil drilling rigs from Baker Hughes
BKR,
+0.62%

on Friday, Michael Lynch, president of Strategic Energy & Economic Research, told MarketWatch. Baker Hughes reported an increase of six oil rigs last week.

“There is a lot of interest in the turning point for U.S. shale production and rig activity has increased very slowly,” said Lynch. After that data, the International Energy Agency’s oil market report will be released Tuesday.

“The combination of supply chain problems, rising COVID cases in Germany, and the gradual reduction in fiscal stimulus might make traders worried about near-term oil demand,” Lynch said.

Also on Nymex Thursday, natural-gas prices edged higher, looking to recoup some of the 2% decline they suffered in the previous session. December natural gas
NGZ21,
+2.17%

traded at $4.945 per million British thermal units, up 1.3%.

The EIA on Wednesday reported that U.S. natural-gas supplies rose by 7 billion cubic feet for the week ended Nov. 5. The report was released a day early because of Thursday’s Veterans Day holiday.

The weekly increase was 18 bcf less than the five-year average for the same week, causing the overall storage deficit to increase to 3.2%, said Christin Redmond, commodity analyst at Schneider Electric, in daily note.

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