Oil prices rebounded on Wednesday after a recent decline, driven by reports showing decreases in U.S. crude and fuel inventories, indicating consistent demand and bolstered by expectations of potential interest rate cuts.
Brent crude futures rose 21 cents to $84.87 per barrel by 0055 GMT, recovering from a 1.3% drop in the previous session. Similarly, U.S. West Texas Intermediate (WTI) crude climbed 26 cents to $81.67 per barrel, following a 1.1% decline earlier.
Concerns over global oil demand had led WTI to slide 3% over the past three sessions, exacerbated by Hurricane Beryl’s impact on the Texas energy sector, which ultimately proved less severe than feared. Brent, meanwhile, declined 3.2% over the same period.
Recent data from the American Petroleum Institute indicated a decrease in U.S. crude stocks by 1.923 million barrels in the week ending July 5, alongside a drop of 2.954 million barrels in gasoline inventories. However, distillate supplies saw an increase of 2.342 million barrels.
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Supporting the market sentiment were remarks by U.S. Federal Reserve Chair Jerome Powell, suggesting a growing likelihood of interest rate cuts to stimulate economic growth, thereby potentially increasing oil consumption.
Investor confidence in a September rate cut rose to nearly 70% following Powell’s Senate testimony, citing improved economic data for the June quarter and its implications for inflation.
Furthermore, a report from the U.S. Energy Information Administration projected global oil demand to surpass supply next year, reversing earlier forecasts of a surplus.
Despite initial disruptions from Hurricane Beryl, Texas oil and gas operations began resuming on Tuesday, with most facilities expected to return to normal output levels soon after ports reopened and power was partially restored.
Market attention now turns to the official U.S. oil stocks data from the Energy Information Administration, scheduled for release at 10:30 a.m. EDT (1430 GMT) on Wednesday.