Oil futures: Crude higher as US inventory data counters SPR release
Quantum Commodity Intelligence - Crude oil futures Wednesday were around 2% higher, as the latest inventory data from the US acted as a counter to the surprise 20 million barrel SPR release announced by the Biden administration.
Front-month September ICE Brent futures were trading at $106.29/barrel (1730 GMT), compared to Tuesday's settle of $104.43/b, while the more-liquid Oct22 contract was trading at $101.39/b.
At the same time, September NYMEX WTI was trading $97.32/b, versus Tuesday's settle of $94.98/b.
Oil prices stabilized Wednesday following the latest US inventory figures, while runaway natural gas prices in Europe and Asia increased the prospect of gas-to-oil switching heading into winter.
The energy complex also found broad support as European natural gas prices initially rallied another 10% in early morning activity Wednesday before giving up most of the gains by early afternoon.
The US Energy Information Administration reported commercial crude oil inventories dropped around 4.5 million barrels over the week to July 22, while gasoline and distillate stocks also dropped.
The American Petroleum Institute (API) reported late Tuesday that US commercial crude inventories dropped by 4.04 million barrels last week versus expectations of a much smaller draw, while gasoline stocks were down by 1.06 million barrels and distillate inventories showed a draw of 550,000 barrels.
Tuesday's initial firm gains were wiped after the US government announced a further 20 million barrel stock release from the Strategic Petroleum Reserve, sending prices tumbling $3/b from daily highs.
However, the announcement caused some confusion as to whether it was it would be part of previously announced sales, or an additional release.
So far, the US has sold 125 million barrels, of which 70 million have been delivered, which resulted in a $0.40/gallon fall in US retail gasoline prices, the White House said, quoting a study by the US Department of Energy.
Prices were also under pressure on the economic front ahead of the US Federal Reserve interest rate decision, as stagflation concerns continue to cast a shadow on financial markets.
Market commentator Stephen Schork told Fox Business the United States is experiencing a "mild recession" and the "pull" on energy prices will be greater as the severity of the downturn intensifies.
"We know we've got runaway inflation," Schork noted, adding that there are "only two ways to attack inflation," through supply construction or demand destruction.
Goldman Sachs said Wednesday it sees a European-zone recession in the second half of 2022, citing disruptions in energy supplies from Russia and the impact on industry and inflation.
