Oil rose toward $75 a barrel on Wednesday after data showed U.S. crude inventories fell more sharply than analysts had forecast, bringing the market’s focus back to tight supplies rather than rising coronavirus infections. Crude inventories fell by 4.1 million barrels in the week to July 23, the U.S.
Energy Information Administration said Wednesday. Gasoline and distillate fuel stocks also dropped. “A rebound in implied demand for both gasoline and distillates, as well as lower refinery runs, has encouraged decent inventory draws for both,” said Matt Smith, director of commodity research at ClipperData.
Brent crude rose 18 cents, or 0.2%, to $74.66 a barrel after posting on Tuesday its first decline in six days. U.S. West Texas Intermediate crude advanced 43 cents, or 0.6%, to $72.08. Oil has risen 45% this year, helped by demand recovery and supply curbs by the Organisation of the Petroleum Exporting Countries and allies, known as OPEC+. OPEC+ agreed to increase supply by 400,000 barrels per day from August, unwinding more of last year’s record supply cut, but this is seen as too low by some analysts given the rebound in demand expected this year.
A rising number of coronavirus cases worldwide, despite vaccination programs, has limited the upside for oil and remains a concern. A statement from a U.S. Federal Reserve policy meeting is also in focus for investors. The dollar was firmer ahead of the meeting, pressuring oil as it makes crude more expensive for other currency holders.
“We will be looking at today’s Fed comments later in the day to provide more significant support as we anticipate additional indications of loose monetary policy,” said Jim Ritterbusch, president of Ritterbusch and Associates LLP in Galena, Illinois.