Oil rose on Wednesday morning in Asia, with investor sentiment improved after the U.S. reported a significant drop in crude oil inventories.
The American Petroleum Institute (API) estimated an 8.322 million-barrel draw for the week ended July 10. The draw was bigger than analyst forecasts of a 2.1 million-barrel draw and reversed the previous week’s 2 million-barrel build.
Brent oil futures rose 0.54% to $43.12 and WTI futures also slid 0.55% to $40.51.
Amid the worsening COVID-19 situation globally, OPEC+ is expected to further step up oil production cuts beyond their July expiry date. The organization is due to meet later today to deliberate on the future level of production. The meeting will decide whether to extend output cuts of 9.7 million barrels per day (bpd) due to end in July or decrease the cuts to 7.7 million bpd.
“OPEC+ decision on production cut tapering will set the tone for the oil market,” ANZ Research said in a note.
Meanwhile, OPEC’s monthly report predicted global oil demand will increase by a record 7 million bpd in 2021 as the global economy recovers from the impacts of COVID-19. But even this estimate is below demand levels in 2019.
Investors will now be looking at data from the U.S. Department of Energy’s Energy Information Administration, due on Wednesday, to see if it corroborates the API data.