Oil climbed more than $1 on Wednesday, reversing some of the previous day’s losses, as a drop in U.S. crude inventories and concern about disruptions to U.S. output from Hurricane Francine countered concerns about weak global demand.
Brent crude futures were up $1.07, or 1.55%, to $70.26 a barrel at 1319 GMT, while U.S. crude futures gained $1.20, or 1.83%, to $66.95.
U.S. crude stocks fell by 2.793 million barrels, gasoline declined by 513,000 barrels and distillates inventories rose by 191,000 barrels, according to market sources who cited the latest week’s American Petroleum Institute figures on Tuesday.
“The API provided some comfort as it showed a sizable decline in crude oil stocks, a forecast-beating draw in gasoline and a tiny build in distillate inventories,” Tamas Varga of oil broker PVM said.
Both oil benchmarks tanked on Tuesday, with Brent falling below $70 to its lowest price since December 2021 and U.S. crude dropping to its lowest price since May 2023, after OPEC revised down its 2024 oil demand growth forecast for a second time.
Concern about Hurricane Francine disrupting output in the U.S., the world’s biggest producer, also lent support, other analysts said.
“The market rebounded autonomously, as Tuesday’s drop was substantial,” said Yuki Takashima, an economist at Nomura Securities, adding that supply disruption fears from Francine also lent support.
About 24% of crude production and 26% of natural gas output in the U.S. Gulf of Mexico was offline due to the storm, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) said on Tuesday.
Following the report on Tuesday from the API, an industry group, official inventory figures from the U.S. government are due at 1430 GMT.
Eleven analysts polled by Reuters estimated on average that crude inventories rose by about 1 million barrels and gasoline stocks fell by 0.1 million barrels.