Oil Prices Recover From 6-month Lows After Drop In U.S. Stockpiles
Oil prices rose on Wednesday, recovering from six-month lows hit the previous day, as a larger-than-expected 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 rose 13 cents, or 0.1%, to $92.47 a barrel by 0035 GMT. West Texas Intermediate (WTI) crude futures climbed 27 cents, or 0.3%, to $86.80 a barrel.
The contracts slumped about 3% on Tuesday as weak U.S. housing starts data spurred concerns about a potential global recession.
"A drawdown of U.S. gasoline stockpiles for a second straight week has reassured investors that demand is resilient, prompting buys," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
"Still, the oil market is expected to stay under pressure, with fairly high volatility, due to worries over a potential global recession," he said.
U.S. crude and fuel stocks fell in the latest week, according to market sources citing American Petroleum Institute figures on Tuesday.
Crude stocks fell by about 448,000 barrels for the week ended Aug. 12. Gasoline inventories fell by about 4.5 million barrels, while distillate stocks fell by about 759,000 barrels, according to the sources.
An extended Reuters poll showed on Tuesday that crude inventories likely dropped by around 300,000 barrels last week and gasoline stockpiles likely fell 1.1. million barrels, while distillate inventories rose.
Investors also awaited clarity on talks to revive the 2015 Iran nuclear deal. Oil supply could rise if Iran and the United States accept a proposal from the European Union, which would remove sanctions on Iranian oil exports, analysts said.
The EU and United States said on Tuesday they were studying Iran's response to what the EU has called its "final" proposal to save the 2015 nuclear deal after Tehran called on Washington to show flexibility.
Meanwhile, Barclays lowered its Brent price forecasts on Tuesday by $8 per barrel for 2022 and 2023, as it expects a large surplus of crude oil over the near-term due to "resilient" Russian supplies.
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