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Wednesday saw only a slight reprieve, as prices snapped three
straight sessions of decline on falling U.S. crude inventories
and growing supply risks from wildfires in Canada boosted
prices.
Brent crude futures for September rose 66 cents, or 0.8%, to
$81.67 a barrel by 0908 GMT. U.S. West Texas Intermediate crude
for September increased 65 cents, or 0.8%, to $77.61 per barrel.
The likely reason for the wider sell-off has been the
"diminishing hopes of demand resurrection," with "an admission
from refiners that the summer leap in consumption is simply not
taking place," said Tamas Varga of oil broker PVM.
Prices had fallen to a six-week low on Tuesday, with Brent
closing at its lowest level since June 9 on ceasefire talks
between Israel and Hamas in a plan outlined by U.S. President
Joe Biden in May and mediated by Egypt and Qatar.
Prices also suffered due to continued concern that the economic
slowdown in China, the world's biggest crude importer, would
weaken global oil demand.
WTI had lost 7% over the previous three sessions, while Brent
shed nearly 5%.
U.S. crude oil, gasoline and distillate inventories fell for the
fourth straight week in the previous week, according to market
sources citing the American Petroleum Institute (API),
reflecting steady demand in the world's largest consumer of oil.
Wildfires in Canada were also supporting prices. The fires have
forced some producers to curtail production and were threatening
a large amount of supply, ING analysts said.
"Market is nearing oversold territory and we still believe that
the fundamentals support prices moving higher from current
levels over the remainder of the third quarter on the back of a
deficit environment," ING analysts said in a note.
The API figures showed crude stocks falling by 3.9 million
barrels in the week ended July 19, the market sources said,
speaking on condition of anonymity. Gasoline inventories fell by
2.8 million barrels and distillates shed 1.5 million barrels.
That would be the first time crude stocks in the United States
fell for four weeks in a row since September 2023.
Official government data on oil inventory data is due for
release on Wednesday.
(Reporting by Paul Carsten in London, Laila Kearney in New York
and Sudarshan Varadhan in Singapore; Editing by Christopher
Cushing, Miral Fahmy, Sherry Jacob-Phillips, Louise Heavens and
Louise Heavens)
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