Oil prices rose more than 1% on Wednesday, recovering some of the previous day’s losses due to a significant drop in U.S. crude inventories and concerns about Hurricane Francine potentially disrupting U.S. output.
According to the American Petroleum Institute (API), U.S. crude stocks decreased by 2.793 million barrels, while gasoline inventories fell by 513,000 barrels. Distillate inventories saw a slight increase of 191,000 barrels. Following this news, Brent crude futures rose by $1.10 (1.6%) to $70.29 per barrel, and U.S. crude futures increased by $1.11 (1.7%) to $66.86.
Tamas Varga from PVM noted that the API report provided reassurance to the market with a notable decline in crude oil stocks and a better-than-expected draw in gasoline.
Both oil benchmarks had experienced significant declines on Tuesday, with Brent falling below $70 for the first time since December 2021, and U.S. crude hitting its lowest point since May 2023, following OPEC’s downward revision of its 2024 oil demand growth forecast.
Additionally, concerns about Hurricane Francine, which has affected about 24% of crude production and 26% of natural gas output in the U.S. Gulf of Mexico, contributed to the price recovery.
Official inventory figures from the U.S. government are expected to be released later today, with analysts predicting a rise in crude inventories by about 1 million barrels and a slight decline in gasoline stocks.