Oil prices climbed on Wednesday after US data showed less inventory build in the previous week, although gains were kept in check as markets await the Federal Reserve’s rate decision.
Brent crude futures were up 1.2% to $95.75 per barrel, while the US West Texas Intermediate (WTI) crude futures advanced 1.4% to $89.57 per barrel.
The two benchmarks increased this week on expectations that fuel demand in China would rise in the next few months following speculations of looser COVID restrictions. Chinese officials, however, have denied the reports.
The decline in Chinese demand due to measures to contain the spread of COVID-19 this year has placed significant pressure on oil prices. In addition, higher interest rates in the US and other countries have hindered economic activity, pushing the demand for crude down.
Oil prices also strengthened after the Organization of Petroleum Exporting Countries (OPEC) raised its medium- and long-term demand outlook, stating that global demand would be higher than originally predicted and may plateau by 2045.
The OPEC also said it was prepared to support prices by cutting output further should the need call for it.
Continued Stability on US Oil Demand
Both contracts found support on Wednesday after the American Petroleum Institute (API) reported that US crude stockpiles dropped by 6.5 million barrels in the prior week ending October 28, above forecasts for a surge of 267,000 barrels and a rise of 4.5 million barrels last week.
The figures hinted at continued stability in the US’s crude demand, despite the record high inflation and soaring interest rates.
Investors await further information on that matter from the Fed meeting set to end later in the day. The central bank is widely expected to make another 75-basis point (bp) rate hike, while its view on a possible dovish stance will be a vital point.
The supply fall also indicates a similar slide in official government data set to be released later in the day, which is expected to show an inventory build of 367,000 barrels in the previous week.
Gasoline demand in the country, particularly, has improved in recent months as prices withdrew from record highs. In addition, the US’s latest manufacturing activity also signaled some strength in the world’s largest economy.
