LONDON, July 10 — Oil prices rebounded today following three days of declines after an industry report showed the United States' (US) crude and fuel stockpiles falling last week, indicating steady demand and the outlook for interest rate cuts improved.
Brent futures rose 21 cents to US$84.87 a barrel by 0055 GMT after falling 1.3 per cent in the previous session.
US West Texas Intermediate (WTI) crude rose 26 cents to $81.67 a barrel after falling 1.1 per cent in the previous session.
WTI has dropped three per cent in the previous three sessions amid concerns about flagging global oil demand and as signs appeared that the Texas energy industry came off relatively unscathed from Hurricane Beryl after it hit the region on Monday. Brent is down 3.2 per cent over the same period.
US crude oil and gasoline inventories fell last week, according to market sources citing American Petroleum Institute figures yesterday, indicating summer fuel demand is steady and driving the rebound after days of declines.
The API figures showed crude stocks were down by 1.923 million barrels in the week which ended on July 5, the sources said.
Gasoline inventories fell by 2.954 million barrels. However, distillate supply rose by 2.342 million barrels.
Prices were also supported by comments from US Federal Reserve (US Fed) chair Jerome Powell, who suggested the case for interest rate cuts is becoming stronger. Lower interest rates should spur more economic growth and, therefore, more oil consumption.
Following Powell's comments investors continued to put a nearly 70 per cent probability on a US Fed rate cut in September.
"Powell’s remarks to the Senate affirmed the improvement in data through the June quarter while maintaining that more good data would boost confidence in the inflation outlook," ANZ analysts said in a note today.
A US Energy Information Administration (EIA) report yesterday supported the outlook for higher oil prices. The report showed that global oil demand will outpace supply next year, reversing a prior forecast for a surplus.
In Texas, oil and gas companies restarted some operations yesterday after Hurricane Beryl lashed the state. However, some facilities sustained damage, and power had not been fully restored.
Beryl's impact on oil and gas production was expected to be limited, and yesterday, some ports reopened, and most producers and facilities were ramping up output.
Investors are expecting official US oil stock data today at 10.30am EDT (1430 GMT) from the EIA.
— Reuters
