Oil prices increased on Wednesday with an anticipated fall in US crude inventories, signaling a recovery in oil demand despite virus-induced fears and positive demand projections for next year by the International Energy Agency (IEA).
International benchmark Brent crude was trading at $74.06 per barrel at 0635 GMT for a 0.62% increase after closing Tuesday at $73.60 a barrel.
American benchmark West Texas Intermediate (WTI) was at $70.91 per barrel at the same time for a 0.63% rise after it ended the previous session at $70.46 a barrel.
On late Tuesday, the American Petroleum Institute predicted a drop in US crude oil stockpiles of 5.44 million barrels, more than the market expectation of a fall of 3.90 million barrels.
A significant drop in inventories indicates an increase in crude demand in the US, the world’s largest oil consumer, assuaging market concerns over dwindling demand.
The International Energy Agency’s (IEA) upward forecast revision of oil demand for next year also pushed prices higher. In its monthly oil report on Tuesday, the Agency revised up its estimations for next year by 100,000 barrels per day (bpd) to 99.4 million bpd.
Compared to the previous year, global oil demand is now expected to rise by 5.2 million bpd this year and by 3.2 million bpd in 2022.
Despite concerns over oil supply disruptions in the Gulf of Mexico; tropical storm Nicholas has not caused much damage compared to Hurricane Ida that hit the region at the end of August.
Nicholas has been downgraded to a tropical storm on Tuesday after making landfall along the Texas coast as a Category 1 hurricane. Over half a million people are without power in Texas, according to the PowerOutage.US website, which tracks outages across the US. There are over 93,000 people without power in Louisiana, which is still recovering from Hurricane Ida's mass devastation.
China's announcement last week on releasing crude oil reserves to the market via public auction, however, is limiting price gains, as the country prepares for its first sale of oil from its strategic reserves on Sept. 24. An initial reserve sale is expected to be for 7.38 million barrels of crude.
By Ebru Sengul Cevrioglu