Data from the US Energy Information Administration revealed a sudden drop in crude inventories of 500,000 barrels in the week ending June 2, as expectations were for a jump of more than 1 million of barrels.
Gasoline inventories rose in the United States by about 2.8 million barrels and distillate inventories rose by 5.1 million barrels, while markets were pricing in an increase of 1.33 million barrels.
The unexpected increase in fuel inventories has raised concerns about consumption in the world’s biggest oil consumer, especially as travel demand surged over the Memorial Day weekend this weekend.
Earlier in the session, oil prices fell on weak Chinese economic data. Chinese exports contracted faster than expected in May and imports fell, albeit at a slower pace, as factories struggled to attract demand from abroad and domestic consumption remained weak.
Wednesday’s data also showed crude oil imports into China, the world’s biggest oil importer, hit their third-highest monthly level on record in May as refineries increased inventories.
Additionally, supporting prices, the Dollar fell as the odds of a Fed rate hike next week faded. A weaker dollar boosts oil demand as crude becomes cheaper for buyers holding other currencies.
The Organization for Economic Co-operation and Development said global economic growth will pick up only moderately over the next year as the full effects of rising interest rates are felt. In its latest report, the organization predicted the global economy would grow 2.7% this year, down from 2.6% in its March forecast.
price regulation
Brent crude futures closed up 66 cents, or 0.9%, at $76.95 a barrel, while US West Texas Intermediate crude futures were up 79 cents, or 1.1%, to $72.53, according to Reuters data.
Both benchmarks jumped more than a dollar on Monday after Saudi Arabia decided to voluntarily cut production by an additional one million barrels a day in July.
“Oil futures appear to be in a ‘tug’ state with slowing Chinese manufacturing demand and lower diesel demand, relative to expected OPEC production cuts and of Saudi Arabia,” said Dennis Kessler, senior vice president of trading. at BOK Financial.
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