Oil prices have risen by more than 1% as a result of a dramatic decline in US oil stocks

2 Aug 2023 , 09:55 AM

Oil prices surged more than 1% on Wednesday, trading around their highest since April, after industry data revealed a considerably steeper-than-expected drop in crude oil stocks in the United States, the world’s largest fuel consumer, last week.

Brent crude futures were up 92 cents, or 1.1%, to $85.83 a barrel, while West Texas Intermediate crude was up 84 cents, or 1.03%, to $82.21 a barrel.

According to market sources quoting American Petroleum Institute numbers, US oil stockpiles declined by 15.4 million barrels in the week ending July 28, compared to analysts’ expectations for a loss of 1.37 million barrels.

If the US government numbers, anticipated later on Wednesday, match the industry depletion estimates, it will be the largest decline in US crude inventory since records began in 1982.

Oil stockpiles have also started to fall in some other locations as demand outstrips supply, which has been restrained by severe production cuts from Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries (OPEC), which has provided price support.

According to API data, gasoline stockpiles declined by around 1.7 million barrels, contrary to predictions of a 1.3 million barrel drop. Distillate inventories declined by roughly 510,000 barrels, falling short of analysts’ expectations of a rise of 112,000 barrels.

With oil prices projected to climb further as a result of the output cuts, the Biden administration has withdrawn an offer to purchase 6 million barrels of oil for the US Strategic Petroleum Reserve, according to an Energy Department official on Tuesday.

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