Oil prices rebounded on Wednesday after three days of declines, driven by an industry report indicating a drop in U.S. crude and fuel stockpiles, signaling steady demand. Additionally, improved prospects for interest rate cuts further bolstered market sentiment.
Brent futures rose 21 cents to $84.87 a barrel by 0055 GMT, recovering from a 1.3% drop in the previous session. Meanwhile, U.S. West Texas Intermediate (WTI) crude climbed 26 cents to $81.67 a barrel, following a 1.1% decline in the prior session.
The recent slump saw WTI drop 3% over the past three sessions, amid concerns about weakening global oil demand and minimal impact from Hurricane Beryl on the Texas energy sector. Brent experienced a similar decline, falling 3.2% over the same period.
Market sources, citing American Petroleum Institute (API) figures, reported a significant reduction in U.S. crude oil and gasoline inventories last week, which indicated steady summer fuel demand. Specifically, crude stocks fell by 1.923 million barrels, and gasoline inventories dropped by 2.954 million barrels, while distillate supplies increased by 2.342 million barrels.
Further supporting oil prices were comments from U.S. Federal Reserve Chair Jerome Powell, suggesting a stronger case for interest rate cuts. Lower interest rates are expected to spur economic growth, subsequently boosting oil consumption. Following Powell’s testimony, investors placed nearly a 70% probability on a Fed rate cut in September.
“Powell’s remarks to the Senate affirmed the improvement in data through the June quarter, while maintaining that more good data would boost confidence in the inflation outlook,” ANZ analysts noted in a statement on Wednesday.
Adding to the positive outlook for oil prices, a U.S. Energy Information Administration (EIA) report on Tuesday forecasted that global oil demand will outpace supply next year, reversing previous expectations of a surplus.
In Texas, oil and gas companies began restarting operations on Tuesday after Hurricane Beryl impacted the state. While some facilities sustained damage and power had not been fully restored, Beryl’s overall impact on oil and gas production was expected to be limited. Ports reopened, and most producers and facilities were ramping up output.
Investors now await the official U.S. oil stocks data from the EIA, scheduled for release on Wednesday at 10:30 a.m. EDT (1430 GMT), to further gauge the market’s direction.
With steady demand and a brighter economic outlook, oil prices are poised for potential gains as the market digests the latest developments and anticipates further data.
