Investing.com– Oil prices rose in Asian trade on Wednesday, extending gains from the prior session on signs of a massive draw in U.S. crude stockpiles, while focus also remained on any potential supply disruptions stemming from Hurricane Idalia.
A drop in the helped oil prices rise sharply on Tuesday, as data showed some cooling in U.S. and the labor market, which could necessitate a less hawkish Federal Reserve.
But bigger gains in prices were held back by uncertainty over rising global supplies and potentially worsening demand.
Markets were also on guard before more economic cues from the U.S. and China due later in the week, as the world’s largest oil consumers face a potential slowdown in economic growth this year.
rose 0.4% to $85.22 a barrel, while rose 0.5% to $81.53 a barrel by 22:12 ET (02:12 GMT).
Both contracts rose over 1% on Tuesday, amid some bets that Hurricane Idalia will disrupt production along the Gulf of Mexico. Chevron (NYSE:) said it had evacuated staff from three platforms, while Kinder Morgan (NYSE:) said it planned to shut a petroleum pipeline.
But so far, the storm is expected to stick to the eastern Gulf, avoiding most major oil producing facilities.
U.S. crude stockpiles fall more than expected, but fuel stocks increase
Data from the (API) showed on late-Tuesday that oil stocks likely fell by over 11 million barrels (mb) in the week to August 25, as refiners ramped up output ahead of the Labor Day holiday that usually marks peak summer demand.
Analysts were expecting a draw of 2.9 mb, after a draw of 2.4 mb in the prior week. But the API data also indicated that gasoline and distillate inventories continued to build, heightening concerns over sluggish fuel demand.
Fuel demand is expected to taper off after the labor day holiday, and has so far remained languid through the summer season.
The API data usually heralds a similar trend from from the Energy Information Administration, which is due later on Wednesday.
Beyond U.S. stockpiles, markets were also watching for any potential supply increases in Russia and Iraq. Russia said it will taper its ongoing production cuts in September, while Turkey’s energy minister signaled that supplies from a northern Iraq pipeline were close to resuming.
U.S., Chinese economic cues on tap
Focus is now on a string of key economic readings from the world’s largest oil consumers, due later in the week. A revised reading on is due later on Wednesday, as are more readings on the labor market.
China is set to release official (PMI) figures on Thursday, while U.S. – the Federal Reserve’s preferred inflation gauge, are also on tap. August data is due on Friday.
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