Oil prices edged higher on Wednesday, as industry data showed a larger-than-anticipated draw in U.S. crude inventories. However, a build in distillate stockpiles somewhat tempered the optimism over tighter markets.
Concerns over potential ceasefire, tropical storm impact
Crude prices had been nursing some losses earlier this week, as chatter over a potential ceasefire between Israel and Hamas led traders to price out some of the risk premium from oil. But recent reports suggested a deal remained elusive.
Prices also fell on Tuesday as the impact of Tropical Storm Beryl appeared much milder than initially expected, with the storm weakening as it moved away from key oil infrastructure in Texas.
Brent crude futures rose 0.2 percent to $84.84 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.3 percent to $80.76 per barrel by 20:12 ET (00:12 GMT).
Mixed signals from API inventory data
Data from the American Petroleum Institute (API) showed late Tuesday that U.S. oil inventories saw a draw of 1.9 million barrels, compared to forecasts for a 0.25 million-barrel draw. Gasoline stockpiles fell by 3 million barrels, while distillates grew by 2.3 million barrels, indicating mixed demand for fuel and heating oil amid sporadic weather conditions.
Uncertain outlook on travel demand
Last week’s draw came after an oversized draw the prior week, as fuel suppliers prepared for record-high travel demand during the Independence Day week. However, it remains to be seen whether this travel demand will persist in the coming weeks, especially amid extreme weather conditions in large parts of the country.
The API data typically previews a similar print from the official government inventory data, due later on Wednesday.
Read more: Oil prices stabilize as market monitors tropical storm Beryl, geopolitical developments
Texas oil industry recovers from tropical storm Beryl
Meanwhile, oil and gas firms in Texas were seen restarting operations on Tuesday, and ports were set to reopen as the impact of Tropical Storm Beryl appeared largely limited. While Beryl had briefly strengthened to a hurricane as it made landfall on Monday, it did not seem to have a lasting impact on oil infrastructure in the Gulf of Mexico.
Focus shifts to Chinese economic data
Looking ahead, the focus is now on key economic readings from top oil importer China, to gauge the condition of the country’s economic recovery. Inflation data from China is due later on Wednesday, while trade data is scheduled for Thursday.
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