Oil increased, snapping a three-day losing streak, as investors assessed a large drop in US inventories and the impact of Western sanctions against leading Russian crude producers.
West Texas Intermediate rose by 0.6% to settle below $61 a barrel, while Brent closed near $65. US crude stockpiles declined 6.9 million barrels last week, the most since early September, along with draws in gasoline and distillates, according to an Energy Information Administration report Wednesday.
The report pushed up oil prices to intraday highs as traders reconciled a tightening supply outlook in the West with mounting threats to Russian flows.
Gasoline futures surged 2.5% on signs of unseasonably high demand.
The data compounded bullish sentiment after US President Donald Trump said he would follow through and enforce harsh new sanctions against Moscow to pressure Vladimir Putin into negotiations to end the war in Ukraine, according to Matthew Whitaker, the US ambassador to NATO.
Indian state-owned refiners are considering whether they can continue to take some discounted Russian oil after the measures were imposed, though some processors will pause purchases for now. Indian Oil Corp. said on Tuesday it is “absolutely not going to discontinue” purchases of Russian crude as long as it complies with international sanctions.
“The market is now trying to assess the longer-term impact of the additional sanctions, which will be determined by the quantity of actual barrels removed from supply,” Standard Chartered analysts including Emily Ashford said in a note.
Oil is on track to notch a third monthly decline, with prices dragged lower by expectations of a global surplus as OPEC+ raises production. Key alliance nations are set to hold discussions this weekend and may sign off on another supply increase.
Adding a ceiling to prices, Federal Reserve Chair Jerome Powell said that a rate cut in December is “far from” a foregone conclusion. A cut has the potential to boost the US economy and raise oil demand.
Traders are also tracking progress toward a US-China trade deal, with Trump and Chinese counterpart Xi Jinping due to meet on Thursday.
Oil Prices
WTI for December delivery was up 0.6% to settle at $60.48 a barrel in New York.
Brent for December settlement rose 0.8% to settle at $64.92 a barrel.
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