Published: Sat, August 03, 2019
Money | By Ethel Goodwin

USA crude oil inventories decreased by 8.5 million barrels

USA crude oil inventories decreased by 8.5 million barrels

Oil prices rose for a fifth day on Wednesday, buoyed by a bigger than expected drop in US inventories and as investors awaited a widely expected cut in interest rates by the Federal Reserve, the first in more than 10 years. It is set for a monthly fall of more than 3%, however, due to lingering worries about oil demand.

U.S. crude oil refinery inputs decreased during the week ending July 26, the U.S. Energy Information Administration (EIA) said Wednesday.

On Monday, WTI crude oil futures for September settled at $56.87 a barrel, up $0.67, or about 1.2%, from previous close.

Market participants are also closely watching the U.S. Crude oil prices jumped after an industry report showed another larger-than-expected weekly inventories drawdown.

West Texas Intermediate for September delivery rose 44 cents to $57.31 a barrel on the New York Mercantile Exchange as at 7:53 a.m. London time.

U.S. President Donald Trump called on the Federal Reserve to make a large interest rate cut, saying he was disappointed in the central bank and that it had put him at a disadvantage by not acting sooner.

According to the EIA, crude oil inventories in the U.S. declined by 8.5 million barrels during the week ending July 26 compared to analysts' estimate for a draw of 2.6 million barrels.

"The move has always been anticipated and represents a double boon for oil prices - on one hand, it should encourage USA oil demand and on the other, it will apply downward pressure on the dollar, " said PVM Oil Associates analyst, Stephen Brennock.

Economic growth in the United States slowed less than expected in the second quarter, strengthening the outlook for oil consumption but, elsewhere, disappointing economic data has increased concerns about slower growth.

Prices rose after the EIA report with USA crude futures touching a two-week high at $58.82 a barrel.

If confirmed by US government data on Wednesday morning, the decline would put crude stocks down for a seventh week in a row.

Net U.S. crude imports also rose last week by 353,000 bpd. "If the Fed matches the intensity of rate cuts they delivered in the 90s, we could see crude prices heavily supported".

Tensions in the Middle East remain high, providing another bullish catalyst for prices, with the United States formally asking Germany to join France and Britain to help secure the Strait of Hormuz after the seizure of a British tanker by Iran.

BP Plc has not taken any of its own oil tankers through the strait since a July 10 attempt by Iran to seize one of its vessels, its chief financial officer said.

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