Aug 31, 2022 03:11AM ET
By: AnalysisWatch
Oil prices recovered slightly on Wednesday as data pointed to steady US fuel demand, giving a breather after a 5% drop a day earlier on fears that demand would suffer from China's increased COVID restrictions and interest rate hikes by central banks.
West Texas Intermediate crude futures in the United States rose 82 cents, or 0.9 percent, to $92.46 per barrel by 0659 GMT, after falling $5.37 the previous session due to recession fears.
Brent crude futures for October expiring Wednesday rose 89 cents, or 0.9 percent, to $100.20 a barrel, paring Tuesday's loss of $5.78. The more actively traded November contract gained 88 cents, or 0.9 percent, to $98.72 per barrel.
Price swings since the start of the conflict in Ukraine six months ago have unnerved hedge funds and speculators and diluted trading, which in turn has caused the market to fluctuate further, as seen on Tuesday.
Supporting market sentiment on Wednesday, data from the American Petroleum Institute showed that gasoline inventories fell by about 3.4 million barrels and distillate inventories, which include diesel and jet fuel, fell by about 1.7 million barrels for the week ended August 26.
The decline in gasoline inventories was nearly three times larger than the 1.2-million-barrel decrease expected on average by eight analysts polled by Reuters. For distillate stocks, they expected a decline of about 1 million barrels.
However, API data showed that crude stocks increased by about 593,000 barrels, against analysts' expectations of a decline of about 1.5 million barrels.
On the supply side, Iraq's oil exports were unaffected by the worst violence seen in Baghdad in years, three sources told Reuters on Tuesday. Clashes eased on Tuesday after influential cleric Moqtada al-Sadr ordered his followers to end protests.
Second, as the threat of a recession looks real, investors would be willing to let Brent hover between $90 and $110 for now, he added.