(Bloomberg) -- Oil erased earlier losses after the release of bullish U.S. inventory data that showed a larger-than-expected drop in crude stockpiles.
The industry-funded American Petroleum Institute reported that crude stockpiles fell 7.23 million barrels, while gasoline supplies declined 4.5 million barrels last week. If confirmed by the government, this would be the fourth weekly crude draw. The gasoline contraction would be largest since April. Analysts surveyed by Bloomberg estimate an almost 3 million barrel contraction in U.S. crude stocks.
Prices fell earlier after U.S. President Donald Trump said that he had fired National Security Advisor John Bolton, one of his most hawkish aides. Bolton’s departure calmed concerns about any White House inclinations to use military might as a diplomatic tool amid escalating geopolitical tensions in the Middle East and Asia.
In the hours preceding Trump’s announcement, crude advanced as much as 1.6% after an OPEC leader said the cartel’s demand estimates were “very conservative” and recession prospects were low. Some support also came from an announcement that Saudi Aramco had announced key banks for top roles in its planned initial public offering which has been pegged to higher oil prices.
Crude is about 13% below its late-April peak as the protracted U.S.-China trade war saps the outlook for global energy demand. Later this week, traders will be closely watching a key OPEC committee meeting in Abu Dhabi for signs of shifts on supply policy. Also, investors are now looking forward to the government’s Energy Information Administration inventory report Wednesday.
Separately, the U.S. lowered its global demand forecast for this year and reduced its forecast for doemstic production, according to the EIA’s monthly Short-Term Energy Outlook.
West Texas Intermediate oil for October delivery rose 2 cents to $57.87 a barrel on the New York Mercantile Exchange at 5:15pm after settling at $57.40.
Brent for November settlement rose 20 cents to $62.79 on the ICE Futures Europe Exchange after settling at $62.38. The global benchmark oil traded at a $5.02 premium to WTI for the same month.
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