Oil prices gain 1% on big US storage withdrawal, weaker US dollar
11:14 am Wednesday, July 17th, 2024
By Scott DiSavino
NEW YORK (Reuters) -Oil prices climbed about 1% on Wednesday on a bigger-than-expected weekly drop in U.S. crude stockpiles and as a weaker U.S. dollar overshadowed signs of lower economic growth in China.
Brent futures rose 96 cents, or 1.2%, to $84.69 a barrel by 10:34 a.m. EDT (1434 GMT), while U.S. West Texas Intermediate (WTI) crude rose $1.36, or 1.7%, to $82.12.
On Tuesday, Brent closed at its lowest since June 14 and WTI at its lowest since June 21.
The premium of Brent over WTI narrowed to around $3.82 a barrel, its lowest since October. That narrowing spread means energy firms have less reason to spend money to send ships to the U.S. to pick up crude for export.
In the United States, the Energy Information Administration (EIA) said energy firms pulled 4.9 million barrels of crude from storage during the week ended July 12.
That compares with the 30,000-barrel decline analysts forecast in a Reuters poll and a drop of 4.4 million barrels in a report from the American Petroleum Institute (API) trade group.
In U.S. refining news, the diesel and 321- crack spreads, which measure refining profit margins, fell to their lowest levels since December 2021 and January 2024, respectively.
A weaker U.S. dollar also helped support oil prices after it fell to a 17-week low against a basket of other major currencies.
A weaker dollar can boost demand for oil by making greenback-denominated commodities like oil cheaper for holders of other currencies.
Also supporting crude prices was rising geopolitical risk, said George Khoury, global head of education and research at CFI, adding that tensions in the Middle East and Europe could continue to fuel risks.
A Liberia-flagged oil tanker was assessing damage and investigating a potential oil spill after it was attacked in the Red Sea by Iran-aligned Houthis in Yemen.
Meanwhile, China, the world’s top oil importer, saw its economy grow 4.7% in the second quarter, official data showed earlier this week, the slowest growth since the first quarter of 2023, capping crude price gains.
“Any announcement from the Third Plenum in Beijing this week is likely to shape the market sentiment due to the size and importance of China’s oil demand growth,” said Rystad Energy’s senior oil analyst Svetlana Tretyakova referring to a key economic leadership meeting.
(Reporting by Scott DiSavino in New York, Arunima Kumar in Bengaluru and Ahmad Ghaddar in London; editing by Louise Heavens, Kirsten Donovan)
