Title: Oil prices rise $1 after drop in U.S. stockpiles

Aug 17, 2022 02:51AM ET

By: AnalysisWatch

Oil prices rose over $1 on Wednesday, rebounding from six-month lows hit the previous day, as an unexpectedly large drop in U.S. oil and gasoline stocks reminded investors that demand remains firm, if overshadowed by the prospect of a global recession.

Brent crude futures were last up 82 cents, or 0.9%, to $93.16 a barrel by 0630 GMT.

West Texas Intermediate (WTI) crude futures also rose 85 cents, or 1%, to $87.38 a barrel.

The contracts slumped about 3% on Tuesday as weak U.S. housing starts data spurred concerns about a potential global recession.

U.S. crude and fuel stocks fell in the latest week, according to market sources citing American Petroleum Institute figures on Tuesday.

Crude stocks declined by about 448,000 barrels for the week ended Aug. 12. Gasoline inventories fell by about 4.5 million barrels, while distillate stocks were down by about 759,000 barrels, according to the sources.

An extended Reuters poll showed on Tuesday that crude inventories probably dropped by around 300,000 barrels last week and gasoline stockpiles likely fell 1.1 million barrels, while distillate inventories rose.

Oil supply could rise if talks to revive the Iran's 2015 nuclear deal with world powers are successful, which would remove sanctions on Iranian oil exports.

The European Union and United States said on Tuesday they were studying Iran's response to what the EU has called its "final" proposal to save the deal after Tehran called on Washington to show flexibility.

When WTI prices were well north of $100, the revival of the Iranian nuclear agreement looked like a potentially winning mid-term issue but it appears to be a less compelling case in the current price and security context

The EU will stop buying all Russian crude oil delivered by sea from early December and ban all Russian refined products two months later as part of sanctions imposed over Moscow's invasion of Ukraine. Russia calls its actions there.