Oil rises after an unexpected drop in US crude inventories

Oil prices saw an uptick in early trading on Wednesday, extending gains from the previous session following industry data showing an unexpected decrease in US crude inventories last week. This decline suggested increased demand and shifted attention away from tensions in the Middle East.

Brent crude futures edged up by nine cents, or 0.1 percent, reaching $88.51 per barrel by 0031 GMT. Similarly, US West Texas Intermediate crude futures rose by ten cents, or 0.11 percent, hitting $83.45 per barrel.

According to sources citing figures from the American Petroleum Institute, US crude inventories fell by 3.237 million barrels in the week ending April 19, contrary to expectations of an 800,000-barrel increase as predicted by six analysts surveyed by Reuters. Traders are now awaiting official US data on oil and product inventories, expected to be released at 10:30 a.m. US time (1430 GMT), to confirm this significant decline.

Meanwhile, there are growing expectations that both the UK and EU will cut interest rates in June, potentially bolstering economic growth and, consequently, oil demand. This sentiment was supported by reports of business activity in the eurozone and the UK growing at the fastest pace in nearly a year.

Despite these developments, traders largely overlooked the latest events in the Middle East during early trading on Wednesday. Reports indicated an escalation in Israeli strikes across Gaza, but this did not significantly impact oil markets.