Oil Holds Advance as Report Points to Shrinking U.S. Inventories
(Bloomberg) — Oil was steady after jumping the most in almost three weeks as an industry report pointed to shrinking U.S. gasoline and crude inventories.
Futures in New York traded near $68 a barrel after closing 2.7% higher on Tuesday. The American Petroleum Institute reported motor fuel stockpiles fell by 1.11 million barrels last week, according to people familiar with the data. That would be the fourth weekly draw, the longest run of declines since September, if confirmed by official figures due later Wednesday.
Oil has run into stiff headwinds this month as the fast-spreading delta variant of the coronavirus leads to a spike in infections and renewed restrictions on movement across the globe, most notably in China. The International Energy Agency is set to release its monthly report on Thursday, giving the market an indication of how it sees the demand outlook amid the Covid-19 resurgence.
The worsening sentiment is being reflected in the oil futures curve. The prompt timespread for Brent was 40 cents a barrel in backwardation — a bullish structure where near-dated contracts are more expensive than later-dated ones. That compares with 92 cents at the end of July.
U.S. crude stockpiles declined by 816,000 barrels last week, the API said. Nationwide inventories are forecast to have dropped by 750,000 barrels, according to a Bloomberg survey before the official Energy Information Administration data.
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