Oil prices edged higher on Wednesday after U.S. oil storage data showed a larger-than-expected draw in crude stockpiles as refiners ramped up output ahead of the summer driving season.
Brent crude oil futures increased 52 cents, or 0.63%, to $83.68 a barrel by 12:00 p.m. EDT (1600 GMT). U.S. West Texas Intermediate crude futures rose 65 cents, or 0.83%, to $79.03 a barrel.
U.S. crude inventories fell by 1.4 million barrels to 459.5 million barrels in the week ending May 3, according to the Energy Information Administration (EIA), rising slightly more than analysts’ expectations.
“Stronger refining activity and exports have encouraged a minor draw to crude inventories, helping unwind some of last week’s large build,” said Matt Smith, lead oil analyst at Kpler.
The EIA, however, expects slower global oil demand growth for the year, a forecast report showed.
A strengthening U.S. dollar limited crude oil prices. A stronger greenback dampens oil demand by making it more expensive for investors holding other currencies.
Hopes of a ceasefire in Gaza have also put some downward pressure on oil prices in recent trading sessions, with some analysts saying the risk premium on oil had declined in tandem.
“Taking away the current geopolitical trigger leaves the market staring into a world of sticky inflation in the U.S. that is countered by interest rates that not only keep the U.S. dollar elevated but make any sort of commodity trading more expensive,” PVM Oil analyst John Evans said.
The U.S. believes negotiations on a Gaza ceasefire should be able to close the gaps between Israel and Hamas. U.S. Central Intelligence Agency Director Bill Burns will travel to Israel on Wednesday for talks with the Israeli Prime Minister Benjamin Netanyahu and other top officials, a source familiar with the matter told Reuters.
Morgan Stanley analysts said they see the geopolitical risk for oil prices dissipating as fears of further escalation in the conflict subside.
Cautious expectations on supply cuts from the Organization of the Petroleum Exporting Countries and its allies (OPEC ) ahead of a June 1 policy meeting also weighed on markets.
Russian Deputy Prime Minister Alexander Novak said on Tuesday that there had been no discussions about an oil output increase by OPEC .
This came after an earlier statement in the day in which he said the group had the option of increasing production.
this copy is being updated
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Published: 08 May 2024, 10:38 PM IST
