Oil prices rise as US inventories shrink more than expected

Investing.com-- Oil prices edged higher in Asian trade on Wednesday as industry data showed a bigger-than-expected draw in U.S. inventories, although a build in distillate stockpiles somewhat offset optimism over tighter markets. 

Crude prices were nursing some losses this week as chatter over a potential ceasefire between Israel and Hamas saw traders price out some risk premium from oil. But recent reports suggested that a deal was nowhere close to being reached. 

Prices also fell on Tuesday as the impact of tropical storm Beryl appeared to be much lesser than initially expected, with the storm also weakening as it moved away from key oil infrastructure in Texas. 

Brent oil futures rose 0.2% to $84.84 a barrel, while West Texas Intermediate crude futures rose 0.3% to $80.76 a barrel by 20:12 ET (00:12 GMT). 

US inventories see bigger-than-expected draw- API data 

Data from the American Petroleum Institute showed on late-Tuesday that U.S. oil inventories saw a draw of 1.9 million barrels, compared to forecasts for a draw of 0.25 mb.

Gasoline stockpiles fell by 3 mb, while distillates grew by 2.3 mb, indicating somewhat mixed demand for fuel and heating oil, amid sporadic weather conditions. 

Last week’s draw comes after an oversized draw in the prior week, as fuel suppliers geared for record-high travel demand during the Independence Day week. But it remained to be seen whether this travel demand would persist in the coming weeks, especially amid extreme weather conditions in large parts of the country. 

The API data usually heralds a similar print from official inventory data, which is due later on Wednesday.

Texas oil industry recovers from Beryl 

Oil and gas firms in Texas were seen restarting operations on Tuesday, while ports were set to reopen as the impact of Beryl appeared to be largely limited.

While Beryl had briefly strengthened to a hurricane as the storm made landfall on Monday, it did not appear to have left a lasting impact on oil infrastructure in the Gulf of Mexico. 

Gaza ceasefire, Chinese data on tap

Oil prices were also dented by speculation over a potential ceasefire between Israel and Gaza, as Hamas made several concessions to reach a deal with Israel. 

But expectations of a ceasefire dwindled as Israel kept up its offensive in Gaza, while Hamas leaders warned that continued aggression by Israel diminished the chances of a ceasefire. 

Focus is now on key economic readings from top oil importer China, to gauge the condition of an economic recovery in the country. Inflation data from China is due later on Wednesday, while trade data is due on Thursday.

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