Crude oil futures settled notably higher on Wednesday, lifted by data showing another weekly drop in U.S. crude inventories.
Traders also looked ahead to the decision of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, with regard to increasing crude production from August. The OPEC+ will announce its decision on Thursday.
West Texas Intermediate Crude oil futures for August ended up by $0.49 or about 0.7% at $73.47 a barrel.
Data released by Energy Information Administration (EIA) showed crude inventories in the U.S. dropped by 6.7 million barrels in the week ended June 25, much higher than an expected drop of 4.7 million barrels.
Gasoline stockpiles were up by 1.5 million barrels last week, as against expectations for a draw of 886,000 barrels. Meanwhile, distillate stockpiles fell by 869,000 barrels in the week, against forecast for an increase of 486,000 barrels.
A report released by the American Petroleum Institute (API) Tuesday evening that crude stockpiles in the U.S. dropped by about 8.2 million barrels last week.
OPEC Secretary General Mohammad Barkindo said on Tuesday that oil demand will likely rise by 6 million barrels per day in 2021, with 5 million bpd of that coming in the second half of the year.
Goldman Sachs is of the view that oil demand will rise by a further 2.2 million bpd by the end of this year.
Quoting an internal OPEC report, Reuters highlights that the oil market could return to a glut after the group is expected to unravel oil production cuts of under 6 million barrels per day by April 2022.