Oil prices saw a modest increase in early Asian trade on Wednesday following industry data revealing a larger-than-expected drawdown in U.S. crude stockpiles. This development has boosted optimism for robust fuel demand during the summer driving season in the United States, the world’s leading oil consumer.
As of 0033 GMT, Brent crude oil futures had risen by 16 cents, or 0.2%, reaching $85.60 a barrel. Similarly, U.S. West Texas Intermediate (WTI) crude futures climbed 14 cents, or 0.2%, to $82.95 per barrel. These slight gains come after both benchmarks closed lower on Tuesday as concerns eased that Hurricane Beryl would disrupt production in the Gulf of Mexico.
Market sources, citing figures from the American Petroleum Institute (API), reported a significant decline of 9.163 million barrels in U.S. crude oil inventories for the week ending June 28. This figure substantially surpassed analysts’ expectations, who had predicted a draw of just 700,000 barrels. However, the data also showed a rise in gasoline inventories by 2.468 million barrels and a decrease in distillates by 740,000 barrels, contrasting with expectations of a 1.3 million barrel drop in gasoline stocks and a 1.2 million barrel decline in distillates.
“Oil prices were supported by a U.S. crude inventories draw, but gains were limited as some investors were still seeking to take profits from the recent rally to reach the highest levels since April,” said Mitsuru Muraishi, an analyst at Fujitomi Securities.
The Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, is set to release its weekly data on Wednesday at 1430 GMT, which will be closely watched for further market cues.
The U.S. gasoline demand is anticipated to surge as the summer travel season gains momentum, particularly with the Independence Day holiday this week. The American Automobile Association (AAA) has forecasted a 5.2% increase in travel during the holiday period compared to 2023, with car travel projected to rise by 4.8%.
On the supply front, a Reuters survey indicated that the Organization of the Petroleum Exporting Countries (OPEC) saw its oil output rise for the second consecutive month in June. This increase was driven by higher supply from Nigeria and Iran, offsetting voluntary supply cuts by other members and the broader OPEC+ alliance.
Meanwhile, Hurricane Beryl, currently moving through the Caribbean Sea, is expected to weaken into a tropical storm before entering the Gulf of Mexico later this week, according to the U.S. National Hurricane Center. This forecast has further alleviated fears of significant disruptions to oil production in the region.
As the market navigates these developments, the interplay between supply dynamics and seasonal demand patterns will likely continue to shape oil price movements in the coming weeks.