USA crude oil inventory data for the week just released by the American Petroleum Institute (API) shows a 1.3 million-barrel draw in line with consensus forecasts, making this a larger reduction in inventory than last week.
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West Texas Intermediate for September delivery was up 1.7 percent to $40.74 a barrel at 9:37 a.m. on the New York Mercantile Exchange.
Aside from the global inventory situation, US government data on Wednesday showed crude stockpiles rose 1.4 million barrels last week, versus analysts’ expectations for an identical draw.
Average daily domestic crude production was down 55,000 barrels at 8.5 million.
“Signs of fatigue are already apparent and include a notable dip in Chinese crude oil imports”, PVM’s Stephen Brennock wrote, adding that spare capacity in the country’s strategic storage space is less than 100 million barrels.
Oil prices have edged down as more-than-expected-output and high volumes of unsold crude across the globe weighed on markets.
The report also displayed that crude oil inventories increase by 1.4 million barrels the previous week.
Crude dipped below $40 a barrel on Monday after USA data pointed to an unexpected increase in commercial oil and gasoline supplies, adding to concerns about a lasting supply glut.
Brent crude oil futures also rose by 3.1% and closed at $43.1 per barrel.
“There is much talk about the product glut replacing the oil glut, and this is a worrisome indicator for crude demand”, said Frank Klumpp, oil analyst at Stuttgart-based Landesbank Baden-Wuerttemberg.
Oil is fluctuating after tumbling more than 20% into a bear market and closing below $40 a barrel on Tuesday for the first time in nearly four months.
“We’re now back looking at a situation in which supply could pick up considerably again and prices as a result head south”. Futures touched $39.19 earlier, the lowest intraday price since April 18.
The outlook for lower demand is coupled with record-high crude production expected from OPEC members this month as top exporter Saudi Arabia pumps close to its highest level.
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“Since there was no news yesterday that might have triggered the price rise, this points to short-covering”, Commerzbank analyst Carsten Fritsch said.
