West Texas Intermediate rose 0.5% after a four-day losing run that was the longest since March. The American Petroleum Institute reported that crude inventories fell 1.16 million barrels last week, including a draw at the key storage hub in Cushing, Oklahoma, according to people familiar with the data. The dollar also weakened, making commodities priced in the currency more attractive.
Crude’s rally had been knocked off course in recent weeks, after surging in the first half of the year as vaccination programs and economic activity gained traction. Now data from the U.S. and China suggesting the recovery may be faltering as the spread of the delta coronavirus variant threatens demand. Since closing in mid-July at the highest since 2018, the U.S. oil benchmark has shed more than 10%, with banks paring price forecasts.
“The weekly API data has provided some overnight relief with both crude oil and gasoline inventories recording drawdowns,” said Tamas Varga, an analyst at PVM Oil Associates.
The API release on Tuesday also showed a decline in U.S. gasoline stockpiles of almost 2 million barrels. Ahead of the official figures due later Wednesday, a Bloomberg survey showed expectations among market watchers for a 1.5 million barrel draw in crude holdings, and 2 million barrel drop in gasoline supplies.
There were also more positive signs emerging from the shape of the futures curve. Brent’s nearest timespread was in a so-called backwardation of 48 cents Wednesday. That structure — where the nearest contracts are more expensive than those at a later date — has started to indicate a stronger market in recent days, after slumping to an 11-week low on Monday.