OIL prices edged higher on Wednesday after data showed US crude stockpiles fell last week as refiners slowly ramped up output ahead of the summer driving season, while a stronger dollar capped gains.
Brent crude oil futures settled 42 cents, or 0.5 per cent, higher at US$83.58 a barrel. US West Texas Intermediate crude futures rose 61 cents, or 0.8 per cent, to US$78.99 a barrel.
US crude inventories fell by 1.4 million barrels to 459.5 million barrels last week, government data showed, compared with a 1.1 million-barrel draw that analysts forecast and industry data that showed a 509,000-barrel increase.
“Stronger refining activity and exports have encouraged a minor draw to crude inventories, helping unwind some of last week’s large build,” said Matt Smith, lead oil analyst at Kpler.
Refinery utilisation rates rose by 1 percentage point to 88.5 per cent of total capacity, but was still lower than rates of 91 per cent a year ago ahead of the Memorial Day weekend at the end of May that kicks off the peak season for gasoline demand.
“Petrol demand is still below 9 million barrels (per day) ahead of the start of the summer driving season. That is a pretty grim situation here,” said Bob Yawger, director of energy at Mizuho.
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A strengthening dollar, which gained as investors bet on the US economy outperforming peers, weighed on crude oil prices. A stronger greenback dampens oil demand by making the dollar-denominated commodity more expensive for investors holding other currencies.
Hopes of a ceasefire in Gaza have put some downward pressure on oil prices in recent trading sessions, with some analysts saying the risk premium on oil had declined in tandem.
“Taking away the current geopolitical trigger leaves the market staring into a world of sticky inflation in the US that is countered by interest rates that not only keep the US dollar elevated but make any sort of commodity trading more expensive,” PVM Oil analyst John Evans said.
The US believes negotiations on a Gaza ceasefire should be able to close the gaps between Israel and Hamas. US Central Intelligence Agency Director William Burns travelled to Israel on Wednesday and met with Israeli Prime Minister Benjamin Netanyahu, an Israel official said. REUTERS
