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Oil prices settle higher after surprise draw in US crude inventories

Published 07/09/2024, 08:45 PM
Updated 07/10/2024, 03:02 PM
© Reuters.

Investing.com-- Oil prices settled higher Wednesday as data showing a larger-than-expected draw in U.S. inventories, suggesting tight conditions in the world's largest consumer. 

At 14:30 ET (18:30 GMT), Brent oil futures added 0.70% to $85.25 a barrel, while West Texas Intermediate crude futures rose 1% to $82.25 a barrel. 

US inventories in surprise draw  

Data from the Energy Information Administration, released Wednesday, showed that U.S. oil inventories unexpectedly fell by 3.4 million barrels in the week through Jul. 5, compared with expectations for a build of 700,000 barrels.

The surprise draw in and crude stocks was driven by a rise in refinery activity to 95.4% of their capacity, above 93.5% in the prior week, following a limited impact on oil infrastructure in the Gulf of Mexico from hurricane Beryl. 

Gasoline stockpiles fell by 2M barrels, while distillates grew by 4.8M barrels.

The unexpected draw comes after an oversized draw in the prior week, as fuel suppliers geared for record-high travel demand during the Independence Day week.

But it remained to be seen whether this travel demand would persist in the coming weeks, especially amid extreme weather conditions in large parts of the country. 

Russian crude exports dip to yearly lows

Russian crude exports in the week through Jul. 7 fell the most since the 2022 invasion of Ukraine, according to ship tracking data.

While there wasn't a clear cause for the decline, ANZ Research in a recent note flagged the recent sanctions on Russia’s shipping industry and a possible increase in the country's discipline on quotas under the OPEC+ supply agreement.  

The sanctions targeting vessels that "Moscow relies on to transport its oil are mostly idle," ANZ Research adds, 

Doubts over Gaza ceasefire 

Gains in oil prices were capped by speculation over a potential ceasefire between Israel and Gaza, as Hamas made several concessions to reach a deal with Israel. 

But expectations of a ceasefire dwindled as Israel kept up its offensive in Gaza, while Hamas leaders warned that continued aggression by Israel diminished the chances of a ceasefire. 

(Peter Nurse, Ambar Warrick contributed to this article.)

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