West Texas Intermediate futures added 0.7% to trade above $72 a barrel after slipping for a second session on Tuesday. The American Petroleum Institute reported a 6.23 million-barrel weekly drop in gasoline inventories, according to people familiar with the figures. That would be the biggest draw in motor fuel stockpiles since March if confirmed by government data later Wednesday.
Global inventories are expected to tighten through the rest of the year as key energy consumers continue to rebound from the pandemic, although the latest Covid-19 resurgence is raising concerns about the short-term demand outlook. The fast-spreading delta variant has led to renewed restrictions in some regions, putting crude on track for its second monthly loss since October.
“Pricing pressures have been temporarily put on hold amid the ongoing tug-of-war between delta variant concerns and expectations of crude deficits,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.
Delta has presented a challenge to the bumper profits being earned in the refining sector, where some companies are having their best performance in years. Processors are eager to make the most of improved margins, yet remain wary that renewed demand weakness could lead to bloated stockpiles and squeeze margins again.
U.S. crude inventories fell by 4.73 million barrels last week, the API said. That would be the ninth draw in 10 weeks if confirmed by the Energy Information Administration on Wednesday. A Bloomberg survey shows a 2.5 million-barrel decline in stockpiles.
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