Jul 27, 2022 02:55AM ET
By: AnalysisWatch
Oil prices held steady on Wednesday as concerns about weaker demand offset industry data that showed a bigger-than-expected drawdown in U.S. crude inventories.
At 0640 GMT, Brent crude futures were trading at $104.55 per barrel, down 15 cents, or 0.1 percent. West Texas Intermediate crude in the United States rose 27 cents, or 0.5 percent, to $95.25 per barrel.
After Tuesday's settlement, industry group the American Petroleum Institute reported that U.S. crude inventories fell by 4 million barrels last week.
That was four times the decline expected by analysts in a Reuters poll.
The sharper drop in inventories should have supported oil prices, but the rebound has been limited by concerns about potentially weak demand, and the White House has said it will continue to release strategic reserves.
Moreover, the prospect of an aggressive interest rate hike by the U.S. Federal Reserve later on Wednesday weighed on sentiment and capped oil's appreciation, he said.
The U.S. Federal Reserve is expected to raise interest rates by 75 basis points later Wednesday, underscoring concerns about the outlook for U.S. demand and the prospect of a stronger dollar, which will make dollar-denominated goods more expensive for buyers holding other currencies.
On Tuesday, the Biden administration said it would sell an additional 20 million barrels of oil from the country's Strategic Petroleum Reserve as part of a previously announced plan to use the facility to calm oil prices boosted by Russia's invasion of Ukraine and the recovery in demand after the COVID-19 pandemic.
In late March, the administration said it would release a record 1 million barrels of oil per day for six months from the SPR.
The United States has already sold 125 million barrels of its reserve, with nearly 70 million barrels delivered to buyers.