(Bloomberg) -- Oil rose, clawing back from a run of losses, after a government report showed that US crude inventories fell to the lowest since February.
West Texas Intermediate topped $77 a barrel after falling 5.5% since last Wednesday. US oil inventories shrank by 3.74 million barrels last week, the Energy Information Administration said. That was the fourth straight decline. Price gains were limited as traders also eyed declines in equity markets.
Crude’s earlier selloff was exacerbated by trend-following algorithms after futures surpasses key technical levels. On Tuesday, WTI settled into oversold territory on the 9-day relative strength index, signaling a rebound was imminent.
Meanwhile, US gasoline inventories dropped the most since March, as some refineries remain shuttered and summer driving season propelled seasonal fuel demand on a four-week basis to the highest level since 2021. Though driving season typically peaks in late July, there may still be some room left to rally.
“It’s still summer driving season,” said Rob Thummel, a portfolio manager at Tortoise Capital Advisors. “There’s still vacation. There could still be some good demand numbers over the next several weeks.”
Oil’s recent bout of weakness has come amid concerns about softer demand in China, the world’s biggest crude importer, with technical traders compounding the downward pressure. Still, futures remain higher year-to-date, as OPEC+ presses on with output curbs, with a Bloomberg tally of Russian flows showing exports dropping to the lowest since December.
Russia also plans to make extra crude output cuts in October and November — and also between March and September of next year — to compensate for overproduction earlier this year, the Energy Ministry said Wednesday.
Elsewhere on the supply side, a rash of wildfires across Canada’s oil patch were threatening almost 10% of the region’s oil production. There were 170 blazes burning in Alberta alone, with more than 50 of them out of control.
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