Investing.com - Crude prices jumped in Asia on Wednesday after a bullish U.S. industry group inventory estimate showed a sharp drop in stocks.
The American Petroleum Institute said crude oil stock fell 4.3 million barrels at the end of last week, while distillates stocks rose 2.7 million barrels and gasoline stock fell 116,000 barrels.
The estimates set up similar and more closely-watched figures from the U.S. Department of Energy due later Wednesday.
On the New York Mercantile Exchange, WTI crude for May delivery jumped 2.28% to $36.71 a barrel.
In China, the Caixin services PMI for March is due with an expected level of 51.4, up from a 51.2 final in February.
Overnight, U.S. Crude futures fell to fresh 1-month lows on Tuesday before turning positive just before the close of trading, as an unexpected decline in monthly U.S. gasoline demand and continued skepticism on the viability of a comprehensive output freeze among major producers provided downward pressure on global oil prices.
Before Tuesday's late rally, the front month contract for U.S. crude closed lower in three straight sessions and six of its last eight. At session lows, WTI crude dropped to its lowest level since March 3.
On the Intercontinental Exchange (ICE), Brent crude for June delivery wavered between $37.97 and $38.92 a barrel, before closing at $37.94, up 0.26 or 0.69% on the trading day. Previously, North Brent Sea futures closed lower in six of eight trading sessions.
Both the international and U.S. domestic benchmarks of crude are down approximately 10% since hitting three-month highs in late-March.
Oil prices retreated again on Tuesday morning, after U.S. government data showed the first monthly drop in gasoline demand in 14 months. Demand for gasoline was fairly strong in January despite poor weather on the month, before steadily increasing again late in February. Signals of weakening demand for gasoline could widen an already expansive gulf between supply and demand for global.
Currently, global supply is outpacing demand by more than 1 million barrels per day leaving energy markets worldwide awash in excessive supply.
Since falling to 13-year lows in mid-February, crude prices rallied sharply on the hopes of a collaborative output freeze between Saudi Arabia, Russia and two other OPEC producers. Last week, however, WTI crude tumbled more than 4% in Friday's session after officials from Saudi Arabia sent strong hints that it will resist any agreement to cap production, unless Iran is part of the deal. While Iran Deputy Oil Minister Marzieh Shahdaei said Tuesday that Tehran will scrap previous plans to ramp up production to 2007 pre-sanction levels, OPEC's second-largest exporter is not expected to agree to any output freeze.
Bullish comments from Kuwait's OPEC governor on the increased likelihood of a deal at an April 17 meeting in Doha even without approval from Iran, were largely shrugged off by investors on Tuesday.