HOUSTON: Oil edged up 1% after hitting a six-month low on Wednesday, as the larger-than-expected drop in U.S. crude inventories outweighed worries about rising production, Russian exports and recession fears.
U.S. crude inventories fell 7.1 million barrels in the week of August 12 to 425 million barrels, according to Energy Information Administration data, compared with analysts’ forecasts of a 275 million drop. 000 barrels in a Reuters poll.
Brent crude rose $1.09, or 1.1%, to $93.45 a barrel as of 12:23 p.m. ET (1723 GMT). Earlier in the day, recession worries pushed the benchmark price to its lowest since February at $91.51. U.S. West Texas Intermediate crude rose $1.39, or 1.6%, to $87.92 a barrel.
U.S. crude exports reached 5 million barrels a day, the highest on record, according to EIA data, as WTI traded at a very favorable price compared to Brent, making ore purchases American crude attractive to foreign buyers. In a sign of strong demand, gasoline inventories also drew 4.6 million barrels, well above the forecast drawdown of 1.1 million barrels.
“We expected it to be a friendly relationship and it was pretty much generalized. Some of these demand destruction concerns that the market was going through seem to have eased off a bit,” said Price Futures Group analyst Phil Flynn.
The American Petroleum Institute on Tuesday reported a drawdown of 448,000 barrels in crude stockpiles and 4.5 million barrels in gasoline stockpiles, sources said.
Oil soared in 2022, approaching an all-time high of $147 in March after Russia’s invasion of Ukraine exacerbated supply issues.
However, Russia began to gradually increase its oil production after the sanctions-related restrictions and as Asian buyers increased their purchases, leading Moscow to increase its production and export forecasts until the end of the year. end of 2025, according to an Economy Ministry document seen by Reuters.
Russia’s export earnings
Russia’s revenue from energy exports is expected to rise 38% this year, in part due to higher oil export volumes, the document said, a sign that the country’s supply has not been impacted as much as the markets had initially expected.
The prospect of a recession has also weighed on oil prices more recently.
On the oil supply front, the market is awaiting developments in talks to revive the 2015 nuclear deal between Iran and world powers, which could eventually lead to an increase in Iranian oil exports if a agreement is made.
The EU and the United States said on Tuesday they were studying Iran’s response to what the EU called its “final” proposal to salvage the deal.
Goldman Sachs analysts said a return of Iranian crude supply would cut their forecast for 2023 by $5 to $10 a barrel, down from $125 a barrel.