Oil climbs on forecast mammoth drop in US stocks

Oil climbs on forecast mammoth drop in US stocks

US estimates fall of 15.4 million barrels in crude stocks although market estimate is decrease of 900,000 barrels

By Sibel Morrow

Crude oil prices rebounded on Wednesday after estimates of a massive weekly drop in US crude inventories, while prospects of another OPEC+ production cut also boosted prices ahead of the group's meeting on Friday.

International benchmark Brent crude traded at $85.64 per barrel at 10.08 a.m. local time (0708 GMT), a 0.86% gain from the closing price on Tuesday of $84.91 per barrel.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $82.06 per barrel, up 0.85% from the session close of $81.37 per barrel on Tuesday.

Investor risk appetite was constrained after Fitch cut the US’ credit rating, citing fiscal deterioration, but a big plummet in US commercial crude oil stockpiles mitigated concerns, as a robust stockpile draw signals solid oil demand in the world's top oil-consuming economy.

Inventories are estimated to contract by around 15.4 million barrels, higher than the market forecast of a drop of 900,000 barrels.

However, demand in China is still on investors’ watch lists as the country tries to recover from pandemic-era demand weakness.

Analysts say worrisome economic data from China may lead to another output cut decision by the OPEC+ group during its meeting on Friday.

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