Houston: Oil climbed about $2 after hitting a six-month low earlier on Wednesday as US government data showed a much larger than expected draw in crude inventories thanks to strong export demand.
US crude stocks fell by 7.1 million barrels in the week to August 12 to 425 million barrels, according to data from the Energy Information Administration, versus analysts’ expectations of a 275,000-barrel drop in a Reuters poll.
Brent crude rose $1.73, or 1.8 per cent, to $94.07 per barrel by 1040 ET (1449 GMT), after falling to its lowest since February at $91.51 earlier in the session. US West Texas Intermediate (WTI) crude rose $2.03 cents, or 2.3 per cent, to $88.46.
US crude exports hit 5 million barrels per day according to EIA data, the highest on record, as WTI has traded at steep discount to Brent and made purchases of US crude more attractive to foreign buyers. In a sign of strong demand, gasoline stocks also drew 4.6 million barrels, much higher than the expected 1.1 million barrel draw.
The American Petroleum Institute on Tuesday had flagged a 448,000 barrel draw in crude stocks and 4.5 million barrels in gasoline inventories, according to sources.
Oil has soared in 2022, coming close to an all-time high of $147 in March after Russia’s attack on Ukraine exacerbated supply concerns. Prices have fallen since as those concerns were edged out by the prospect of recession.
British consumer price inflation jumped to 10.1 per cent in July, its highest since February 1982, intensifying a squeeze on households, and pushing oil prices lower earlier in the day.
“There are growing downside risks as a result of the growth outlook and ongoing uncertainty around China’s Covid restrictions,” said Craig Erlam of brokerage OANDA. An exodus of participants, especially hedge funds and speculators, has made daily price swings far greater than in previous years. On the oil supply front, the market is awaiting developments from talks to revive Iran’s 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports if a deal is reached.
The European Union and United States said on Tuesday they were studying Iran’s response to what the EU has called its “final” proposal to save the deal.