Oil recovers as US inventories fall, interest rate cut outlook improves

By Georgina McCartney

(Reuters) – Oil prices rebounded on Wednesday after three days of declines, after an industry report showed that U.S. oil and fuel inventories fell last week, indicating stable demand, and that prospects for interest rate cuts have improved.

Brent futures rose 21 cents to $84.87 a barrel by 0055 GMT, after falling 1.3% in the previous session.

West Texas Intermediate (WTI) crude oil rose 26 cents to $81.67 a barrel after falling 1.1% in the previous session.

WTI has fallen 3% in the previous three sessions amid concerns about reduced global demand for oil and as signs emerge that the Texas energy industry emerged relatively unscathed from Hurricane Beryl after it hit the region on Monday. fair. Brent fell 3.2% in the same period.

U.S. crude oil and gasoline inventories fell last week, according to market sources citing data from the American Petroleum Institute on Tuesday, indicating that summer fuel demand is stable and driving a recovery after days of declines.

API figures showed that oil inventories fell by 1.923 million barrels in the week ending July 5, the sources said. Gasoline stocks fell by 2.954 million barrels. However, distillate supply increased by 2.342 million barrels.

Prices were also supported by comments from US Federal Reserve Chairman Jerome Powell, who suggested that the case for interest rate cuts is becoming stronger. Lower interest rates should stimulate more economic growth and therefore more oil consumption.

Following Powell’s comments, investors continued to place a near 70% probability on a Fed rate cut in September.

“Powell’s comments to the Senate affirmed the improvement in data during the June quarter, while maintaining that more good data would increase confidence in the inflation outlook,” ANZ analysts said in a note on Wednesday.

The prospect of higher oil prices was also supported by a report from the US Energy Information Administration (EIA), released on Tuesday, which shows that global oil demand will outstrip supply next year, reversing a forecast previous surplus.

In Texas, oil and gas companies restarted some operations Tuesday after Hurricane Beryl hit the state, while some facilities sustained damage and power was not 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 increasing production.

Investors await official data on US oil inventories on Wednesday at 10:30 a.m. EDT (2:30 p.m. GMT) from the EIA.

(Reporting by Georgina McCartney in Houston; Editing by Christian Schmollinger)