Oil prices increased on Wednesday after US data showed a larger-than-anticipated drop in crude inventories, indicating a rebound in the country’s demand outlook.
International benchmark Brent crude traded at $85.27 per barrel at 10.12 a.m. local time (0712 GMT), a 0.42% gain from the closing price on Tuesday of $84.91 per barrel.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $81.59 per barrel, up 0.53% from the previous session’s close of $81.16 per barrel.
Late Tuesday, the American Petroleum Institute (API) announced its estimate of a fall of 11.5 million barrels in US crude oil inventories relative to the market expectation of a 2.9 million-barrel drop.
The US Energy Information Administration’s data on oil stocks will be announced later on Wednesday. A fall in crude stocks in line with the API’s expectations would signal a rebound in crude demand in the US, the world’s largest oil consumer, and support upward price movements.
The threat from Storm Idalia, which is moving towards Florida and posing a danger to oil production in the nearby Gulf of Mexico with possible power outages, is restraining more price declines.
US President Joe Biden made an emergency declaration for Florida regarding the storm on Monday and gave assurances that the federal government would fully support the state in preparation for the storm and its aftermath.
Meanwhile, oil markets also focused on the monetary policy of the US Fed.
US Federal Reserve Chair Jerome Powell on Friday said inflation remains too high and the central bank is prepared to raise interest rates further.
‘In the upcoming meetings, we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,’ he added.
Prospects of further interest rate hikes eased following softer US job data released on Tuesday.
According to Labor Department figures, US job openings declined to 8.8 million in July, coming in lower than expectations. The market expectation for the figure was to come in at 9.46 million, while the figure in June was revised down to 9.16 million from 9.58 million.
