HOUSTON: Oil prices rose on Wednesday, supported by large draws in US crude and fuel stocks, but were still close to their lowest level in six weeks due to concerns over weak global demand.
Still, prices snapped three straight sessions of decline on falling US crude and fuel inventories, as well as growing oil supply risks from Canadian wildfires.
Brent crude futures for September rose 66 cents, or 0.81%, to $81.67 a barrel by 1300 GMT. US West Texas Intermediate crude for September increased 78 cents, or 1.01%, to $77.74 per barrel. US crude inventories fell by 3.7 million barrels last week, the EIA said, compared with analysts’ expectations in a Reuters poll for a 1.6-million-barrel draw. US gasoline stocks fell by 5.6 million barrels, compared with analysts’ expectations for a 400,000 draw.
Distillate stockpiles, which include diesel and heating oil, fell by 2.8 million barrels versus expectations for a 250,000-barrel increase, the EIA data showed. “The (EIA) report is very bullish. We saw big uptick in gasoline inventories and a big draw in crude and it does signal that the market could see more crude draws in the future,” said Phil Flynn, an analyst at Price Futures Group.
“It looks like demand is ahead of supply.” However, the market remained wary about global summer demand. US oil refiners are expected to report sharply lower second-quarter earnings versus a year ago after a listless summer driving season weakened refining margins, energy analysts said.
Prices are under pressure from ceasefire talks between Israel and Hamas and continued concern that the economic slowdown in China, the world’s biggest crude importer, would weaken global oil demand. Crude oil deliveries to India, the world’s third-biggest oil importer and consumer, also slipped in June to their lowest since February, government data showed. WTI lost 7% over the previous three sessions, while Brent was down nearly 5%.
Buoying prices, wildfires in Canada forced some producers to curtail production and threatened a large amount of supply. Imperial Oil said it has reduced non-essential staff at its Kearl oil sands site as a precaution.