Oil prices climb as U.S. crude inventories drop

Oil prices climbed in the global commodities market on Wednesday as a report shows a sharp decline in U.S. crude inventories.

Chinese demand outlook remains negative, while the World Bank’s latest report indicates there will be an oil glut in 2025 and 2026.

This is expected to keep crude oil prices in check with more bearish outlook from other stakeholders in the industry.

Today, Brent crude is up 0.8% to $71.27 a barrel, while WTI trades 0.9% higher at $67.83 a barrel.

The American Petroleum Institute reported late Tuesday that US commercial crude oil inventories decreased by 573,000 barrels, surpassing market expectations of a 2.3 million barrel rise.

The drop in crude reserves reflected market perceptions of strengthening domestic demand, supporting upward price movements.

Official figures from the Energy Information Administration (EIA) are scheduled for later in the day. If a fall in crude oil inventories is confirmed, prices are likely to climb further.

Meanwhile, US growth and private sector employment data, which will be released this week, are expected to give insight into the pace of interest rate cuts by the US Federal Reserve (Fed).

While it is considered certain that the Fed will reduce the policy rate by 25 basis points next month, the predictions that the bank will make another rate cut in December are at the level of 74%.

Growth in economic activity is expected to positively affect oil demand in the country. Moreover, Israel’s ongoing attacks in the Middle East, where most of the world’s oil resources are located, supported upward price movements.

Crude benchmarks are still hovering at one-month lows as fears of supply disruptions in the Middle East ease and the market shifts its focus to a weaker demand outlook and prospects of a supply surplus next year.

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