Oil prices rise as US crude inventories unexpectedly shrink
2024.07.23 22:09
Investing.com– Oil prices rose in Asian trade on Wednesday, recovering mildly from recent losses as expectations of tight near-term markets were furthered by industry data showing a draw in U.S. inventories.
But oil prices were nursing steep losses in recent sessions as the outlook for crude soured, especially in the face of a forecasted surplus in 2025. Concerns over top importer China and chatter over an Israel-Hamas ceasefire also weighed on crude markets.
expiring in September rose 0.5% to $81.40 a barrel, while rose 0.4% to $76.22 a barrel by 21:02 ET (01:02 GMT).
Both contracts rose slightly after tumbling to their weakest levels since early-June. Strength in the also weighed on crude markets.
US inventories see unexpected draw- API
Data from the showed U.S. oil inventories shrank by 3.9 million barrels (mb) in the week to July 19, ducking expectations for a build of 0.7 mb.
The API data, which usually heralds a similar trend from official inventory data, showed inventories shrinking for a fourth consecutive week, as oil demand likely picked up with the travel-heavy summer season.
The API data also showed draws in gasoline and distillate inventories, indicating demand in the world’s largest fuel consumer remained robust. This trend is also expected to keep oil markets tight in the near-term.
Official from the Energy Information Administration is due later on Wednesday.
Oil outlook dour amid supply glut fears
But tightness in oil markets is expected to abate in the coming months, with Morgan Stanley forecasting an oil surplus by the beginning of 2025. The investment bank also expects crude pricees to trend in the high $70s by next year.
Increased global oil production, coupled with the prospect of softer demand in top importer China, is expected to keep oil markets well-supplied in the coming months.
China has been a major pain point for crude markets, amid growing uncertainty over an economic recovery in the country. Recent data showed the country’s economy grew less than expected in the second quarter, while its oil imports fell sharply in June.
The Third Plenum of the Chinese Communist Party yielded few cues on Beijing’s plans for more stimulus.
Sentiment towards China was also on edge amid uncertainty over how a change in U.S. administration will affect Washington’s stance towards the country.
