Oil steadies as demand concerns dispel lower US inventories

Oil prices stabilized on Wednesday as data showing a larger-than-expected drop in US crude inventories dispelled concerns about weak demand.

Brent crude futures recorded $104.55 a barrel, up 15 cents, or 0.1 percent. US West Texas Intermediate crude rose 27 cents, or 0.5%, to $95.25 a barrel.

After Tuesday’s settlement, the American Petroleum Institute said US crude stocks fell by 4 million barrels last week.

This is more than four times the decline expected by analysts in a Reuters poll.

The Fed is expected to raise interest rates by 75 basis points, underscoring concern about the outlook for demand in the US and the potential for a stronger dollar, which will make dollar-denominated commodities more expensive for holders of other currencies.

The administration of US President Joe Biden said on Tuesday that it would sell an additional 20 million barrels of oil from the country’s Strategic Petroleum Reserve as part of a previously announced plan to use the reserve to cool oil prices boosted by Russia’s invasion of Ukraine and recover demand from the Covid-19 pandemic.

The US administration said in late March that it would withdraw 1 million barrels of strategic reserves per day for six months. The United States has already sold 125 million barrels of reserves, with nearly 70 million barrels delivered to buyers.