Oil prices climbed Wednesday on the back of an estimated decline in US crude stocks, indicating a rebound in demand in the country.
International benchmark Brent crude traded at $90.16 per barrel at 09.06 a.m. local time (0606 GMT) for a 0.14% gain from the closing price of $90.03 a barrel in the previous trading session.
American benchmark West Texas Intermediate (WTI) was at $82.63 per barrel at the same time for a 0.68% gain after the previous session closed at $82.07 a barrel.
The American Petroleum Institute (API) announced late Tuesday its forecast of a fall in US crude oil inventories of 1.3 million barrels, exceeding market expectations of a 1.55 million-barrel increase.
The forecast of such a large inventory draw indicates a recovery in crude demand in the US, easing investor concerns about dwindling demand and supporting higher prices.
The US Energy Information Administration (EIA) will release official oil stock data later Wednesday, which if a drop in stock levels is confirmed, will set prices on an upward trajectory.
Demand euphoria increased more on indications of improving Chinese demand. Private mega-refiner Zhejiang Petrochemical Corp (ZPC) secured an additional quota of 10 million tonnes of crude oil imports for 2022, and ChemChina, a state-run company, received a further 4.28 million tonnes, together totaling around 104 million barrels.
On the supply side, tightened market conditions following the OPEC output cut decision and the EU’s upcoming sanctions on Russian hydrocarbon exports are further supporting price upticks.
The oil producer group, OPEC , decided on Oct. 5 to cut production by 2 million barrels per day (bpd).
OPEC members, including the United Arab Emirates (UAE), Oman, and Algeria, have expressed support for the move to reduce output by 2 million bpd, despite US criticism of the UAE and Saudi Arabia, OPEC's de-facto leader.
Under the sixth set of sanctions, EU leaders decided in early July to cut Russian oil imports by 90% by the end of the year.
The strategy calls for phasing out Russian crude oil shipments by Dec. 5 and refined product deliveries by Feb. 5.