Oil prices edged higher for the second consecutive time Wednesday following information that the U.S. crude inventories dropped lower than expected last week, easing worries over glut, which have impacted markets recently.
The global benchmark Brent crude was up 0.7 percent at $73.94 a barrel after gaining 0.5 percent on Tuesday, while the U.S. light crude was 5 cents higher at $68.57, having risen nearly 1 percent in the previous session.
The American Petroleum Institute (API) reported Tuesday that crude and fuel stockpiles fell by 3.2 million barrels in the week to July 20 to 407.6 million barrels, compared with analyst expectations for a decrease of 2.3 million barrels.
“The overnight API figures set a positive tone for oil prices with draws across the main inventory categories from crude to a sizeable decline in gasoline, which is seasonally the focal point as the driving season ramps up,” Harry Tchilinguirian, oil strategist for French bank, BNP Paribas said in a monitored report.
Official figures were still expected from the U.S. Department of Energy’s Energy Information Administration.
“Prices are moving higher after the API reported a more massive draw than analysts had expected,” said Stephen Innes, trader at brokerage OANDA.
Additionally, sentiment was also supported by an International Monetary Fund report about skyrocketing inflation in Venezuela, limiting its ability to boost oil output, Innes said.
“Venezuelan oil production has already plummeted to a new 30-year low of 1.5 million barrels a day in June,” he said.
Oil prices have come under pressure this month as a trade dispute between the United States and China, as well as other major economic blocs, has raised the possibility of slower economic growth and weaker global energy demand as higher tariffs stifle imports.
But the global economy is still growing strongly and it is not clear how the trade dispute may impact business.
Reports that China will increase infrastructure spending have also helped reduce concerns that U.S.-China trade tensions will dent Chinese demand for oil.