Oil prices rebound as US inventories drop

Oil prices bounced back on Wednesday, snapping a three-day losing streak, driven by a decline in US crude inventories and growing supply concerns due to wildfires in Canada.

Brent crude futures rose 40 cents to $81.41 a barrel, while US West Texas Intermediate (WTI) crude gained 40 cents to $77.36.

Data from the American Petroleum Institute (API) indicated a significant drawdown in US crude, gasoline, and distillate inventories for the fourth consecutive week.

This suggests robust demand in the world’s largest oil consumer. Additionally, wildfires in Canada have disrupted production, tightening supply.

“Market is nearing oversold territory and we still believe that the fundamentals support prices moving higher from current levels over the remainder of the third quarter on the back of a deficit environment,” ING analysts said in a note.

According to anonymous sources, API data indicated a 3.9-million-barrel drop in crude stocks for the week ending July 19. Gasoline inventories decreased by 2.8 million barrels, while distillates saw a 1.5-million-barrel decline.

This marks the first consecutive weekly decline in US crude stocks since September 2023. Official government data on oil inventory will be released on Wednesday.

Oil prices dropped to a six-week low on Tuesday, with Brent reaching its lowest point since June 9 due to ceasefire negotiations between Israel and Hamas, as proposed by US President Joe Biden in May and facilitated by Egypt and Qatar.

Prices also declined due to ongoing worries about the economic slowdown in China, the world’s largest crude importer, potentially dampening global oil demand.

Attribution: Reuters