By Barani Krishnan and Liz Moyer
Investing.com — Oil prices rose on Wednesday for the first time in three days after data showing US crude stockpiles resumed their downtrend last week following a surprise hike the previous week.
Prior to the rebound, a new surge in Covid cases from the Delta variant of the virus posed headwinds for the market.
New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled up 74 cents, or 1%, at $72.39 per barrel.
London-traded Brent, the global benchmark for oil, finished the session up 28 cents, or 0.4%, at $74.74.
Oil’s upside was restored after the Energy Information Administration reported that crude inventories dropped by 4.089 million barrels during the week to July 23, compared with analysts' expectations for a draw of 2.928 million barrels.
Crude inventories rose for the first time in nine weeks in the previous week to July 16, after drawing down almost 50 million barrels over two months.
The big drawdowns in crude came as refiners focused on pushing out as much gasoline as they could this summer to meet projected demand for the peak U.S. driving season.
“It seems that the hit to crude demand is minimal thus far,” said Ed Moya, analyst at New York’s OANDA, adding that crude markets may still need “to wait out the current Delta variant jitters for another couple weeks”.
According to the EIA, refiners operated last week at 91.1 percent of capacity, not far from highs seen during the summer of 2019, well before the onset of the pandemic.
Gasoline stockpiles on their own fell by 2.25 million barrels against a forecast 1.24 million. In the previous week, the count for gasoline declined by just 121,000 barrels versus a forecast draw of 1.04 million.
The outlier for the July 16 week, however, was diesel-heavy distillates, which drew down by 3.1 million barrels, more than quadruple the forecast decline of 700,000. The outsized draw shows that demand for trucking and other commercial vehicle fuel was as strong as the consumption of gasoline.