Oil rises after US crude inventories decline

Wednesday, July 03, 2024 - 21:12
Point Trader Group

Oil prices rose, on Wednesday, after US crude inventories fell more than expected, but limited trading before the Independence Day holiday in the United States and fears of an increase in global inventories limited gains.

Brent crude futures rose $1.10, or 1.28%, to settle at $87.34 per barrel.

US crude futures gained $1.07, or 1.29%, to reach $83.88 per barrel upon settlement.

The US Energy Information Administration announced that crude oil inventories fell by 12.2 million barrels last week, more than the expectations of analysts polled by Reuters for a decline of 680,000.

Analysts said that the market reaction was weak, however, for reasons including the decrease in trading volumes before Independence Day.

The two benchmarks fell at the close yesterday, Tuesday, as fears faded that Hurricane Beryl would disrupt production in the Gulf of Mexico.

Demand for gasoline is expected to rise in the United States, the world's largest oil consumer, with the start of the summer travel season with the Independence Day holiday this week. The American Automobile Association expects holiday travel to rise 5.2% from 2023, with car travel rising 4.8%.

Oil prices were also supported by the rise in risk premiums associated with tension in the Middle East, and indicators of slowing inflation in the United States, which revive hopes of lowering interest rates.

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