Oil Prices Rebound Over 1% Amid U.S. Output Concerns and Inventory Drop

Oil prices rose over 1% on Wednesday, recovering some losses from the previous day, as a significant drop in U.S. crude inventories and concerns about Hurricane Francine disrupting output outweighed worries about weak global demand.

Brent crude futures increased by $1.10, or 1.6%, to $70.29 a barrel at 0807 GMT, while U.S. crude futures gained $1.11, or 1.7%, reaching $66.86 per barrel. The gains followed a steep decline on Tuesday, which saw Brent drop below $70 to its lowest level since December 2021, and U.S. crude hit its lowest since May 2023, after OPEC downgraded its 2024 oil demand growth forecast for the second time.

Market sources, citing the American Petroleum Institute (API) data, reported that U.S. crude stocks fell by 2.793 million barrels in the latest week, while gasoline inventories decreased by 513,000 barrels. Distillate inventories saw a modest rise of 191,000 barrels.

Concerns over Hurricane Francine disrupting U.S. output also lent support to oil prices. The U.S. Bureau of Safety and Environmental Enforcement (BSEE) reported that approximately 24% of crude production and 26% of natural gas output in the Gulf of Mexico were offline due to the storm.

Official inventory figures from the U.S. government are expected later on Wednesday, with Reuters’ analysts predicting crude inventories to have risen by about 1 million barrels and gasoline stocks to have dropped by 0.1 million barrels.