Global oil prices saw a notable uptick on Wednesday as US crude inventories dropped sharply, reflecting stronger-than-expected domestic demand.
The report from the American Petroleum Institute (API) showed a decrease of 573,000 barrels in US commercial crude stocks, surpassing market predictions of a 2.3-million-barrel rise. This unexpected decline in inventories helped drive prices upward, with Brent crude rising by 0.8% to $71.27 per barrel, while West Texas Intermediate (WTI) climbed by 0.9% to $67.83 per barrel.
The market now eagerly awaits confirmation from the Energy Information Administration’s (EIA) official data, expected later today. If EIA reports further declines, analysts anticipate additional price increases, strengthening oil’s short-term bullish momentum.
Despite the surge, broader market outlooks remain cautious due to China’s weak demand and the World Bank’s recent forecast of a potential oil glut in 2025 and 2026. This potential oversupply is likely to temper long-term oil price gains, with stakeholders expressing bearish sentiment on the future of global crude prices.
The situation in the Middle East also contributes to current price dynamics. Israel’s ongoing conflict, occurring near some of the world’s key oil-producing regions, has stoked concerns over possible supply chain disruptions. However, as immediate fears ease, crude benchmarks hover near one-month lows, underscoring the market’s mixed outlook.
This week’s anticipated US growth and private sector employment data may further shape oil price trends, offering insight into the Federal Reserve’s potential rate cuts. While a 25 basis point cut is expected next month, there is a 74% chance of a subsequent reduction in December, which could boost economic activity and oil demand in the US.
