By Adedapo Adesanya
Oil prices settled higher on Wednesday after a jump in US refining activity last week drove a larger-than-expected decline in gasoline (petrol) and crude inventories despite minimal supply disruptions from Hurricane Beryl.
During the session, Brent futures went up by 42 cents or 0.5 per cent to $85.08 per barrel and the US West Texas Intermediate (WTI) appreciated by 69 cents or 0.85 per cent to $82.10 a barrel.
The US Energy Information Administration (EIA) reported that crude inventories in the world’s largest oil producer fell by 3.4 million barrels to 445.1 million barrels in the week ended July 5 versus a massive draw of 12.2 million barrels for the previous week.
The American Petroleum Institute (API) reported on Tuesday an estimated inventory draw of 1.9 million barrels for the week to July 5, strengthening the perception of a strong peak demand season in the world’s largest consumer of the commodity.
Indications that the Texas oil sector survived Hurricane Beryl led both crude futures to contract in the previous three sessions lower.
The Port of Houston said on Wednesday morning that it has restored regular start times for operations at its eight public terminals.
Limited hurricane damage at refineries and offshore production facilities has mostly restored them to regular operations, therefore relieving supply-related worries.
Prices had also crept higher following a Senate testimony from the US Federal Reserve Chairman, Mr Jerome Powell which bolstered expectations of a rate reduction later in the year even though he said the US central bank would not rush into cuts until it was sure the economy could manage them.
The release of weaker-than-expected economic data from China pressured prices. The data in question was June inflation, which came in lower than expected with prices increasing for the fifth month in a row, at 0.2 per cent from May’s 0.3 per cent.
This fuelled worries about consumer demand in the world’s largest oil importer.
Meanwhile, benchmarks remained depressed even after the Organisation of the Petroleum Exporting Countries (OPEC) released its latest monthly report, reiterating expectations of robust demand for the commodity, keeping its growth forecast at 2.2 million barrels per day this year.
Analysts noted that geopolitical risk did little to move prices with investors somewhat fatigued over discussions about a ceasefire in Gaza and the war in Ukraine.
Sayyed Hassan Nasrallah, the leader of Hezbollah in the Middle East, declared that Hezbollah would cease operations without further talks if Hamas and Israel were to negotiate a ceasefire in Gaza.