Oil edges up after sharp U.S. crude inventory drop

Business

Oil prices rose on Wednesday after a steep drop in U.S. crude inventories, but another record day for coronavirus cases worldwide kept gains in check.

Brent crude futures LCOc1 settled at $43.75 a barrel, up 53 cents, or 1.2%. U.S. West Texas Intermediate crude futures CLc1 settled at $41.27 a barrel, gaining 23 cents, or 0.6%.

U.S. crude oil inventories fell by 10.6 million barrels last week to 526 million barrels, the Energy Information Administration said, the largest drawdown since December.

Net U.S. crude imports fell 1 million barrels per day to 1.9 million bpd, the EIA said.

The fall in crude stocks was likely a result of supply cuts, agreed in April by the Organization of the Petroleum Exporting Countries and its allies, finally being realized.

“The expectation is that the OPEC cuts are going to lead to bigger draws in the United States and this could be the beginning of it,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

A record number of new coronavirus infections were reported globally. In the United States, nearly 150,000 people have died from the novel coronavirus – the most for any country – having risen by 10,000 in 11 days.

“The virus is spreading like wildfire across the Americas while Europe and Asia are displaying worrying signs of a second surge in cases,” said Stephen Brennock of oil brokerage PVM.

Six U.S. states reported one-day records for coronavirus deaths and Texas cases passed the 400,000 mark.

Attempts to provide relief amid the outbreak were in disarray after U.S. Republicans on Tuesday disagreed over their own plan for providing $1 trillion in new coronavirus aid. The U.S. Federal Reserve pledged to continue to help prop up the economy, providing some support to oil.