Oil Gains as Larger-Than-Expected Stockpile Drop Revives Bulls

(Bloomberg) -- Oil rose after a US government report showed nationwide stockpiles fell the most in two months, outpacing market expectations.  

US crude stockpiles fell 9.6 million barrels last week, the Energy Information Administration said Wednesday. In another bullish data point, gasoline demand rose to the highest since December 2021 on a four-week average.

“Despite a tight physical market, oil had been pushed down on sentiment,” said Matt Sallee, a portfolio manager at Tortoise. “This week, we are getting a logical response to physical inventories. The market might be waking up to the fact that the market is fairly tight.”

While some traders hope for a summer demand boost to revitalize oil prices, WTI is on track for its first back-to-back quarterly decline since 2019, due to a sluggish economic recovery from China and aggressive interest-rate hikes from the US Federal Reserve. Resilient Russian exports have added to the pressures. Prices have been largely rangebound since early May, but have often swung rapidly within that range. 

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