Oil Steadies After Big Drop in US Stockpiles Boosts Optimism

By Bloomberg

Jun 29, 2023

image is BloomburgMedia_RWW9XIT0AFB401_29-06-2023_06-00-10_638235936000000000.jpg

Storage tanks at the BP Plc Cherry Point Refinery near Blaine, Washington, U.S., on Friday, Nov. 19, 2021. Total U.S. oil stockpiles, including commercial inventories of crude and refined products, fell by the most in 11 weeks, dropping by 12.1 million barrels a recent U.S. Energy Information Administration report showed. Photographer: James MacDonald/Bloomberg

(Bloomberg) -- Oil steadied in Asia after a big decline in US crude stockpiles provided some optimism for a market weighed down by demand concerns.

West Texas Intermediate traded near $69 a barrel after closing 2.8% higher in the previous session. Crude inventories shrunk by 9.6 million barrels last week, the largest draw in more than a month, according to the Energy Information Administration. Gasoline demand also surged to the highest since 2021.

The US benchmark is still on track for its first back-to-back quarterly decline since 2019 as China’s lackluster economic recovery and aggressive monetary tightening by the Federal Reserve weighed on prices. Supply has also been plentiful, bolstered by resilient exports from Russia, despite sanctions.

US jet fuel demand rose to the highest since 2019 last week, the EIA reported on Wednesday. Consumption should continue to climb as the nation heads into the July 4th weekend, with a record number of motorists set to hit the road.

Federal Reserve Chair Jerome Powell and some of his peers said on Wednesday that more interest-rate hikes are likely due to resilient inflation, a measure that will drag on energy consumption and cap oil-price gains.

By Ben Sharples