WTI Crude Oil gains on steeper-than-expected US inventory drop

Key points

Futures on US West Texas Intermediate Crude Oil rose on Wednesday on the back of steeper-than-anticipated decrease in US crude stocks, which indicated fuel demand remained strong.

The latest data by the American Petroleum Institute showed crude oil inventories had dropped by 2.408 million barrels during the week ending June 23rd, which exceeded market expectations of a 1.467 million barrel drop.

This has been the most significant weekly decline in inventories since the third week of May.

The data seemed to have offset concerns that further policy tightening by global central banks could hinder economic growth and weigh on oil demand.

“Overall, the commodity sector, including crude oil, is suffering from risk adversity amid China growth worries and U.S. data strength pointing to higher rates,” Ole Hansen, head of commodity strategy at Saxo Bank, was quoted as saying by Reuters.

Since US consumer confidence grew in June, according to The Conference Board data, this brought forth some concern the Federal Reserve would probably have to continue its tightening cycle.

Additionally, European Central Bank President Christine Lagarde said this week persistently high inflation might require the bank not to declare an end to interest rate increases.

As of 11:42 GMT on Wednesday WTI Crude Oil Futures for August delivery were edging up 0.12% to trade at $67.78 per barrel.

At the same time, Brent Oil Futures for September delivery were edging up 0.11% on the day to trade at $72.59 per barrel.