Oil prices surged on Wednesday, driven by expectations of higher demand as the U.S. dollar weakened and reports indicated a decline in U.S. crude and gasoline inventories. Brent crude futures rose by 0.6% to $82.88 a barrel, while U.S. West Texas Intermediate crude futures (WTI) climbed by 0.7% to $78.54 a barrel by 0505 GMT.
Market sources, citing figures from the American Petroleum Institute (API), revealed a significant drop in U.S. crude oil inventories by 3.104 million barrels in the week ending May 10. Additionally, gasoline inventories fell by 1.269 million barrels, while distillates saw a modest rise of 673,000 barrels.
Anticipation for the release of U.S. government inventory data later on Wednesday further fueled optimism, with expectations of another drawdown in crude stockpiles as refineries increase their production to meet the rising fuel demand, especially with the onset of the peak summer driving season.
ANZ Research echoed these sentiments in a note, stating, “Expectations of another drawdown in U.S. oil inventories should support oil prices.”
The release of U.S. Consumer Price Index (CPI) data on Wednesday is also anticipated to provide insights into whether the Federal Reserve may consider cutting interest rates later this year. A potential rate cut could stimulate economic growth and subsequently boost fuel demand, further bolstering oil prices.
Overall, the combination of a weakening U.S. dollar, declining inventory levels, and expectations for supportive economic indicators is contributing to the bullish sentiment in the oil market, with investors closely monitoring developments for further price movements.
Source: REUTERS
