Oil futures: Crude higher on US crude, gasoline stock draws
Quantum Commodity Intelligence – Crude oil futures were climbing higher after prices finally found some support following a reported drop in US crude and gasoline inventories.
Front-month Sep24 ICE Brent futures were trading at $82.02/b (1735 GMT), compared to Tuesday's settle of $81.01/b.
At the same time Sep2424 NYMEX WTI was trading at $77.91/b, versus Tuesday's settle of $76.96/b.
Benchmarks were given a lift as the latest Energy Information Administration (EIA) data revealed a 3.75 million drawdown in crude inventories, while a steep drop in gasoline stocks of 5.5 million barrels last week also lifted the oil complex with NYMEX RBOB up over 1.5%.
Markets had found support earlier from the latest American Petroleum Institute report showing crude stockpiles falling another 3.9 million barrels last week, while gasoline and distillates also dropped after refinery disruptions resulting from Hurricane Beryl.
Brent has still dropped by around $6/b from early-July peaks and is now back below levels prior to the June OPEC+ meeting that triggered a crash when the group announced an unwinding of some output cuts from October.
Backdrop
The poor macroeconomic backdrop has hit benchmarks as China missed GDP targets, European growth remains stalled, and inflationary concerns continue to plague the US outlook.
In the longer term, a Donald Trump return to the White House is expected to be more friendly to US oil companies, although analysts have said US producers will be mindful of the impact on prices from a drilling boom.
"Brent crude prices dropped to early June levels as investor sentiment moved towards bearish pricing of Trump's presidency risks and as a stronger dollar fuelled demand concerns at the end of last week," said Goldman Sachs in a report.
The US investment bank also noted that the geopolitical risk premium remains muted despite rising tensions between Israel and Yemen.
"As the oil market looked through rising tensions between Israel and Yemen and Biden's exit from the election race, the risk premium remains nearly zero and the average July Brent price is at our inventory-based $85/b forecast," added Goldman.
