Oil surged in New York after an industry group reported a steep drop in U.S. crude stockpiles.
Futures for October added as much as 1.8 percent after the September contract settled at a one-week high when it expired Tuesday. Inventories fell by 5.17 million barrels last week, the American Petroleum Institute was said to report. That’s more than double the decline forecast in a Bloomberg survey ahead of government data later on Wednesday. Prices were also boosted by a five-day slide in the dollar.
“The API inventory data published after close of trading yesterday are lending buoyancy to prices this morning,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Thus the official inventory data this afternoon are also likely to show a more marked inventory reduction.”
Oil remains about 10 percent below the three-year high reached in late June as the U.S.-China trade war and the risk of contagion from Turkey’s economic crisis raise fears about global fuel demand. Yet crude markets could be poised to tighten again as President Donald Trump’s administration moves to constrict shipments from Iran, while Venezuela’s economic chaos engulfs its oil industry.
West Texas Intermediate crude for October delivery rose as much as $1.18 cents to $67.02 a barrel on the New York Mercantile Exchange as of 1:37 p.m. London time. Total volume traded was about 34 percent below the 100-day average. The September WTI contract expired Tuesday at $67.35.
Brent for October settlement climbed $1.30 to $73.93 a barrel on the London-based ICE Futures Europe exchange, after adding 42 cents on Tuesday. The global benchmark crude traded at a $6.91 premium to WTI.
Analysts surveyed by Bloomberg estimate that U.S. stockpiles fell by 2 million barrels last week, with all but two of the 13 respondents expecting a decline when the U.S. Energy Information Administration releases data Wednesday.
WTI fell last week after the EIA showed crude inventories unexpectedly rose the week before, while stockpiles at the Cushing storage hub in Oklahoma climbed for the first time since May.
A weakening dollar has also enhanced the appeal of commodities priced in the U.S. currency this week. The Bloomberg Dollar Spot Index slid 1.3 percent in the past four sessions and traded little changed Wednesday after Trump was said to complain about the Federal Reserve’s interest-rate increases.
Investors are also awaiting the outcome of trade talks between the U.S. and China later this week, the first formal negotiations since June. Trump said at a rally on Tuesday that various trade discussions would take time, signaling a major breakthrough is unlikely.
Other oil-market news:
Petroleos de Venezuela SA said oil facilities were not affected by an earthquake that hit the South American nation Tuesday. U.S. pipelines were dealt another blow from Trump’s trade policies, with anti-dumping duties on pipes adding to steel tariffs. The Commerce Department plans to issue duties on welded pipes from various countries. Iran said the U.S. SPR release shows other producers can’t raise production sufficiently and will only send prices higher.