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Oil prices climbed on Wednesday after industry data showed US crude and product inventories fell more sharply than expected last week, reinforcing the expectation that demand will outstrip supply growth even amid a surge in Covid-19 cases.
US West Texas Intermediate (WTI) crude futures rose 43c, or 0.6%, to $72.08 a barrel at 1.19am GMT, reversing Tuesday’s 0.4% decline.
Brent crude futures rose 38c, or 0.5%, to $74.86 a barrel, after shedding 2c on Tuesday in the first decline in six days.
Data from the American Petroleum Institute industry group showed US crude stocks fell by 4.7-million barrels for the week ended July 23, petrol inventories dropped by 6.2-million barrels and distillate stocks were down 1.9-million barrels, according to two market sources, who spoke on condition of anonymity.
That compared with analysts’ expectations for a 2.9-million fall in crude stocks, after a surprise rise in crude inventories the previous week in what was the first increase since May.
Traders are awaiting data from the US Energy Information Administration (EIA) on Wednesday to confirm the drop in stocks.
“Most energy traders were unfazed by last week’s build, so expectations should be high for the EIA crude oil inventory data to confirm inventories resumed their declining trend,” Oanda analyst Edward Moya said in a research note.
On petrol stocks, analysts had expected a 900,000 barrel decline drop in the week to July 23.
“The US is still in peak driving season and everyone is trying to make the most of this summer,” Moya said.
Fuel demand expectations are undented by soaring cases of the highly infectious Delta variant of the coronavirus in the US, where the seven-day average for new cases has risen to 57,126. That is about a quarter of the pandemic peak.
