Oil prices hold amid economic caution

Oil prices stabilised on Wednesday after initial gains driven by data showing a larger-than-expected decline in US crude stockpiles were tempered by economic concerns in China and the eurozone.

Brent crude futures edged up by 7 cents to $86.31 per barrel at 0925 GMT, a 0.08 per cent increase, while US West Texas Intermediate crude futures rose by 5 cents to $82.86 per barrel, marking a 0.06 per cent gain.

Industry reports indicated that US crude oil inventories dropped by 9.163 million barrels in the week ending June 28, surpassing analysts’ expectations of a 700,000 barrel draw. However, gasoline inventories rose by 2.468 million barrels, and distillates fell by 740,000 barrels.

“This decline in crude levels might just have saved more of a sell-off after the hurricane news,” noted PVM Oil analyst John Evans.

The Energy Information Administration is set to release its weekly data later on Wednesday, expected to provide further insights into market dynamics.

Concerns about economic slowdowns persisted as surveys revealed that China’s services sector grew at its slowest pace in eight months, while business growth across the eurozone also decelerated sharply in June.

Additionally, OPEC output increased in June for a second consecutive month, according to a Reuters survey, despite pledges from OPEC+ members to maintain supply quotas. Analysts cited these factors, along with subdued recovery signals from China, as contributing to a bearish sentiment in the market.

Traders are also closely monitoring US gasoline demand ahead of the Independence Day holiday, with expectations for increased travel-boosting consumption forecast by the American Automobile Association by 5.2 per cent compared to last year.