Oil edged higher after a two-day decline as an industry report pointed to shrinking US crude and gasoline stockpiles.
Futures in New York traded near $90 a barrel after falling 3.2% over the past two sessions. The American Petroleum Institute reported another drop at the key storage hub at Cushing, while signalling that nationwide inventories shrunk by 2 million barrels, according to people familiar with the data. Official figures from the Energy Information Administration are due late Wednesday.
Oil’s sizzling rally has paused this week after a run of seven weekly gains propelled prices to the highest since 2014. The surge has been underpinned by stronger-than-expected demand and supply outages, with geopolitical tensions — particularly Russia-Ukraine — adding a risk premium to prices.
Crude is eyeing $100 a barrel and Indian oil refiners stepping up purchases to meet annual production goals may provide an extra boost. The surge in energy prices, however, poses a challenge for consuming nations and central banks as they try to stave off inflation while supporting economic growth.
White House Economic Adviser Jared Bernstein said in an interview on CNN that releasing more crude oil reserves is an “option that can be put on the table as needed” to help tackle gasoline prices. That tactic, however, has had little impact so far, with motor fuel rising to the highest in more than seven years.
“While sentiment in the market is still broadly constructive, there are a number of developments which could lead to further downward pressure,” said Warren Patterson, head of commodities strategy at ING Groep NV. A de-escalation of the Russia-Ukraine standoff or progress in Iran nuclear talks could lead to weaker prices, he added.
West Texas Intermediate for March delivery rose 0.3% to $89.66 a barrel on the New York Mercantile Exchange at 12:01 p.m. in Singapore after sliding 2.2% on Tuesday.
Brent for April settlement gained 0.4% to $91.14 on the ICE Futures Europe exchange after falling 2.1% on Tuesday.
A flurry of diplomacy preceding the resumption of Iran nuclear talks in Vienna on Tuesday suggests sides are trying to close in on a long-sought deal, which would lead to a resumption of official crude exports from the OPEC producer. EU foreign policy chief Josep Borrell said parties were “reaching the last steps” of the negotiations.
US gasoline stockpiles fell by about 1.14 million barrels last week, the API said. The EIA is expected to report that nationwide crude inventories rose by 1.5 million barrels, according to the median estimate in a Bloomberg survey.