Oil prices climbed on Wednesday as investors weighed a recovery in U.S. refinery activity as industry data showed U.S. crude stockpiles unexpectedly fell last week against concerns of rocky demand in Europe.
Brent crude futures rose 35 cents, or 0.5%, to $68.74 a barrel by 0641 GMT, after initially falling as much as 27 cents.
U.S. West Texas Intermediate (WTI) crude futures rose 43 cents, or 0.7%, to $65.21 after falling as much as 18 cents in early trade.
The price gains halted three straight sessions of declines for both benchmarks.
According to trading sources citing data from the American Petroleum Institute, U.S. crude inventories fell by 1 million barrels in the week to March 12.
“The market was wrong-footed but still pleasantly surprised after U.S. oil stockpiles unexpectedly fell last week,” said Stephen Innes, chief global market strategist at Axi.
Consequently, gasoline stocks fell less than expected, declining by 926,000 barrels, compared with estimates for a draw of 3 million barrels.
However, analysts are hopeful as they are looking forward to official data due from the Energy Information Administration due Wednesday.
Investors are also looking to the U.S. central bank’s Federal Open Market Committee (FOMC) results, which ends its two-day meeting on Wednesday, for indications on the direction of monetary policy.
Effects of Europen Vaccine Concerns on Oil Supply
The market has drifted lower over the past few days as more European countries pause vaccinations of AstraZeneca’s COVID-19 vaccines due to concerns over possible serious side effects, which could slow down the recovery of the economy in most countries.
While demand is growing in India and the United States, it remains weak in Europe, ANZ said in a research note, noting France’s road fuel consumption fell 10.8% in February from a year earlier, according to the country’s petroleum industry federation.
The market will also be looking for clues on the state of the U.S.-China relationship after high-level talks in Alaska later this week.
Read also; Oil Prices Slip Amidst Growing Concerns on Stockpiles and COVID-19 Vaccine.
