By Georgina McCartney
(Reuters) – Oil prices rebounded on Wednesday following three days of declines after an industry report showed and fuel stockpiles fell last week, indicating steady demand, and the outlook for interest rate cuts improved.
futures rose 21 cents to $84.87 a barrel by 0055 GMT, after falling 1.3% in the previous session.
U.S. West Texas Intermediate (WTI) crude rose 26 cents to $81.67 a barrel, after falling 1.1% in the previous session.
WTI has dropped 3% in the previous three sessions amid concerns about flagging global oil demand and as signs appeared that the Texas energy industry came off relatively unscathed from Hurricane Beryl after it hit the region on Monday. Brent is down 3.2% over the same period.
U.S. crude oil and gasoline inventories fell last week, according to market sources citing American Petroleum Institute figures on Tuesday, indicating summer fuel demand is steady and driving the rebound after days of declines.
The API figures showed crude stocks were down by 1.923 million barrels in the week ended July 5, the sources said. Gasoline inventories fell by 2.954 million barrels. However, distillate supply rose by 2.342 million barrels.
Prices were also supported by comments from U.S. Federal Reserve Chair Jerome Powell that suggested the case for interest rate cuts is becoming stronger. Lower interest rates should spur more economic growth and therefore more oil consumption.
Following Powell’s comments investors continued to put a nearly 70% probability on a Fed rate cut in September.
“Powell’s remarks to the Senate affirmed the improvement in data through the June quarter, while maintaining that more good data would boost confidence in the inflation outlook,” ANZ analysts said in a note on Wednesday.
The outlook for higher oil prices was also supported by a U.S. Energy Information Administration (EIA) report on Tuesday showing global oil demand will outpace supply next year, reversing a prior forecast for a surplus.
In Texas, oil and gas companies restarted some operations on Tuesday after Hurricane Beryl lashed the state, while some facilities sustained damage and power had not been fully restored.
Beryl’s impact on oil and gas production was expected to be limited, and on Tuesday, some ports reopened and most producers and facilities were ramping up output.
Investors are expecting official U.S. oil stocks data on Wednesday at 10:30 a.m. EDT (1430 GMT) from the EIA.
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