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Oil Prices Inch Up in Response to Unexpected U.S. Crude Inventory Draw
In the early hours of Wednesday's Asian trading session, oil prices saw a slight increase. This movement came after industry data revealed a more substantial dip than anticipated in U.S. crude stockpiles, fueling optimism for robust fuel demand during the forthcoming summer driving season in the United States, the world's largest oil consumer.
Brent crude oil futures experienced a modest climb of 16 cents, or 0.2%, reaching $85.60 per barrel by 0033 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures increased by 14 cents, or 0.2%, to settle at $82.95 per barrel. The previous day had seen both benchmarks dipping amid diminished concerns that Hurricane Beryl would impact production in the Gulf of Mexico.
Data from the American Petroleum Institute indicated a significant fall in U.S. crude oil inventories by 9.163 million barrels for the week ending June 28. This figure considerably surpassed analyst expectations, which had forecasted a mere 700,000-barrel draw. On the other hand, gasoline inventories saw an increase of 2.468 million barrels, with distillates falling by 740,000 barrels. Analysts had estimated a decrease of 1.3 million barrels in gasoline stocks and a 1.2 million barrels drop in distillates stocks.
"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," commented Mitsuru Muraishi, an analyst at Fujitomi Securities. Investors and market watchers are now keenly awaiting weekly data from the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, which is scheduled for release at 1430 GMT on Wednesday.
Boosted Summer Demand Predictions
With the onset of the summer travel season and the Independence Day holiday approaching, U.S. gasoline demand is expected to surge. The American Automobile Association predicts that travel during this period will increase by 5.2% compared to 2023, with car travel specifically up by 4.8%.
Supply Dynamics and OPEC's Role
On the supply front, the Organization of the Petroleum Exporting Countries (OPEC) reported an increase in oil output for June, marking the second consecutive month of rising production. A Reuters survey highlighted that higher supplies from Nigeria and Iran managed to counterbalance voluntary supply cuts from other members within OPEC and the broader OPEC+ alliance.
Hurricane Beryl's Impact Diminishing
Concerns regarding Hurricane Beryl, which has been moving through the Caribbean Sea, have eased as forecasts predict it will downgrade to a tropical storm by the time it enters the Gulf of Mexico later this week, per the U.S. National Hurricane Center.
