Oil rises after bigger-than-expected drop in U.S. inventories

Oil prices rose on Wednesday after an industry report showed U.S. crude inventories last week fell more than analysts expected, bolstering hopes that fuel demand in the world’s biggest economy can weather the coronavirus pandemic.

Brent crude LCOc1 was up 67 cents or 1.5 per cent at $45.17 a barrel, by 1012 GMT, after falling around one per cent on Tuesday.

West Texas Intermediate CLc1 oil was up 65 cents or 1.6 per cent at $42.26 a barrel, having dropped 0.8 per cent in the previous session.

The American Petroleum Institute (API) said on Tuesday that crude stocks fell by four million barrels last week against analysts’ expectations in a Reuters poll for a draw of 2.9 million barrels.

It also showed falls in gasoline and distillate stocks.

Official government data is due later on Wednesday.

“Fall in U.S. API crude inventories…, the third sizeable weekly fall in a row, has supported prices today,” Mr Jeffrey Halley, Senior Market Analyst said at OANDA.

A downward revision to a key U.S. oil production forecast for this year also lent support to prices.

The U.S. Energy Information Administration now expects U.S. crude production to fall by 990,000 barrels per day (bpd) this year, to 11.26 million bpd, steeper than the 600,000 bpd decline it forecast last month.

Still, growing uncertainty over a stalemate in Washington in talks for a stimulus package to support recovery from the deepest impact of the pandemic may weigh on prices looking ahead.

In India, refined fuels consumption fell to 15.68 million tonnes in July, down 11.7 per cent year-on-year and 3.5 per cent below June’s level, data from the Petroleum Planning and Analysis Cell (PPAC) of the Ministry of Petroleum and Natural Gas showed.