Oil rose on Wednesday, after falling more than 2% in the previous session, as reports on falling US crude and fuel stockpiles refocused investors on strong demand from the world’s largest oil consumer.
Brent crude rose 30 cents, or 0.4%, to $81.07 a barrel as of 0358 GMT. West Texas Intermediate crude (WTI) rose 39 cents, or 0.5%, to $77.46 a barrel.
U.S. crude inventories fell by about 6.1 million barrels in the week ended April 21, far exceeding analysts’ forecasts who had expected crude inventories to drop by about 1.5 million barrels, according to figures from the American Petroleum Institute (API) on Tuesday.
Gasoline inventories fell by 1.9 million barrels last week, while distillate inventories increased by 1.7 million barrels, API reported. Official oil stock data from the US government will be released today.
Oil prices, which fell more than 2% on Tuesday, are almost back to the level they were before the Organization of the Petroleum Exporting Countries (OPEC) and other producer allies such as Russia announced an additional production cut in early April.
In general, the strength of the upward momentum brought about by the OPEC cut has been broken. The fact that Russia’s oil exports did not show a significant decrease does not allow the expected support on the supply side.
As API data lifts the market on Wednesday, continued economic worries and prospects for further rate hikes that could dampen fuel demand growth resist signs of improving short-term consumption gains.
US consumer confidence slid to a nine-month low in April as worries about the future escalated, further raising the risk that the economy could slide into recession this year.
The data revealed a sharper-than-expected slowdown in consumer confidence, pointing to a more negative downward economic outlook since the beginning of April.
The market is tracking uncertainty over a spillover effect on First Republic Bank, which on Monday announced a drop of more than $100 billion in deposits in the January-March period, fueling fears of a potential banking crisis that could affect the U.S. economy.
Investors also expressed concerns that potential new rate hikes by central banks in the US, UK, and European Union, which are struggling with inflation, could slow economic growth and reduce energy demand in these countries.
The US Federal Reserve, the Bank of England, and the European Central Bank are expected to raise interest rates at their upcoming meetings. The Fed meets on May 2-3.