Oil prices surge in Asian trade on Wednesday, fueled by U.S. inventory draw and Middle East tensions
After a brief dip due to profit-taking, crude oil prices rebounded as data from the American Petroleum Institute (API) showed a larger-than-expected draw in U.S. inventories. This positive news, coupled with ongoing supply disruptions in Libya and tensions in the Middle East, pushed prices higher.
In Asian trading, WTI crude oil for October delivery rose by 0.5% to $79.92 a barrel, while Brent crude oil increased by 0.5% to $75.92 a barrel by 20:25 ET (00:25 GMT).
U.S. inventories decline more than forecasted by API
The API reported a 3.4 million barrel draw in U.S. oil inventories for the week ending August 23, surpassing expectations of a 3 million barrel draw. Gasoline and distillate stockpiles also decreased, reflecting strong demand in the U.S. fuel market.
Investors are now eagerly awaiting the official report from the Energy Information Administration (EIA) later today, which is expected to confirm the API’s findings.
Despite concerns about a potential economic slowdown in the U.S., the consistent decline in oil inventories suggests that demand remains robust. However, the end of the summer travel season in September could lead to a slight decrease in fuel demand.
Geopolitical risks elevate oil prices
Aside from supply and demand factors, geopolitical tensions in the Middle East are also contributing to the rise in oil prices. The conflict in Libya, where oil production has been halted due to internal disputes, could lead to tighter global markets as the country is a significant oil exporter.
Furthermore, ongoing tensions between Israel and Hamas, as well as recent clashes between Israel and Hezbollah, are adding to the risk premium in oil prices.
Overall, the combination of inventory drawdowns in the U.S. and geopolitical risks in key oil-producing regions is driving oil prices higher in today’s trading session.