U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Wednesday after an industry report showed a bigger-than-expected weekly drawdown. The news appears to be off-setting any concerns over future demand due to the weakening global economy. Traders are now awaiting the release of the U.S. Energy Information Administration’s (EIA) weekly inventories report at 14:30 GMT.
American Petroleum Institute Weekly Inventories Report
Late Tuesday, the API reported a crude oil inventory draw of 3.45 million barrels for the week-ending August 15. Traders were looking for a draw of 1.889-million barrels.
According to Oilprice.com, “After today’s inventory move, the net draw for the year is 7.98 million barrels for the 34-week reporting period so far, using API data.
The API also reported a 403,000-barrel draw in gasoline inventories for the week-ending August 15. Analysts were looking for a build in gasoline inventories of 169,000 barrels for the week.
Distillate inventories rose by 1.806 million barrels for the week, while inventories at the Cushing, Oklahoma futures hub fell by 2.803 million barrels.
Middle East Tensions Supportive
Tensions in the Middle East remained in focus as U.S. Secretary of State Mike Pompeo said on Tuesday that the United States would take every action it can to prevent an Iranian tanker in the Mediterranean from delivering oil to Syria in contravention of U.S. sanctions.
At 14:30 GMT, the EIA will release its weekly inventories report. It is expected to show a 1.4 million barrel draw down. We could see above average volatility with the release of today’s numbers since we are nearing the end of peak U.S. driving season.
October WTI crude oil is getting close to changing its trend to up. This will take place on a move through $57.40. December Brent crude oil is nearing a technical retracement zone at $59.87 to $60.95. This area could stop the rally.
Lingering concerns over U.S.-China trade relations and worries over a possible global recession are also helping to limit gains.
This article was originally posted on FX Empire
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