American Petroleum Institute forecasts larger-than expected drop of 6.11 million barrels in US stockpiles
Oil prices increased on Wednesday on the back of an estimated decrease in US crude inventories, while tight supply after two hurricanes in the US Gulf of Mexico, and soaring demand is also supporting further price gains.
International benchmark Brent crude was trading at $75.44 per barrel at 0617 GMT for a 1.45% rise after closing Tuesday at $74.36 a barrel.
American benchmark West Texas Intermediate (WTI) was at $71.58 per barrel at the same time for a 1.54% increase after it ended the previous session at $70.49 a barrel.
Prices extended gains on Wednesday after the American Petroleum Institute estimated a more-than-expected drop in US crude oil stockpiles.
The institute predicted a drop in US crude oil stockpiles of 6.11 million barrels, more than the market expectation of a fall of 2.40 million barrels.
The forecast of a larger inventory draw signals a recovery in crude demand in the US, easing investor concerns about declining demand, which, in turn, supports higher prices.
The US Energy Information Administration (EIA) will release official oil stock data later on Wednesday. Oil prices are expected to continue rising if the EIA signals a drop in stocks.
However, supply is expected to remain tight from continuous supply disruptions in the US Gulf of Mexico from Hurricane Ida, which hit the region at the end of August.
The disruption from the region’s largest oil producer, Shell, will continue through the year-end as the company assessed significant structural damage in some of its offshore facilities.
Soaring natural gas prices in Europe ahead of the winter season continue to support the upward trend in prices, while investors are still concerned about the wider market effect of China’s Evergrande debt crisis.
The announcement of the Fed monetary policy decisions is due to be announced late Wednesday. The central bank may signal an interest rate hike by late 2022, and begin tapering the process of reducing accumulating $120 billion monthly assets on its balance sheet – next month.