Oil prices rise on signs of bumper drawdown in US inventories

Investing.com-- Oil prices rose in Asian trade on Wednesday, staying near two-month highs after industry data showed U.S. inventories saw a massive drawdown in the past week, boosting optimism over demand.

Prices fell slightly on Tuesday, hit by some profit-taking and as fears of supply disruptions due to Hurricane Beryl largely faded. 

Brent oil futures expiring in September rose 0.2% to $86.41 a barrel, while West Texas Intermediate crude futures rose 0.2% to $82.07 a barrel by 20:35 ET (00:35 GMT). 

A weaker dollar- following some encouraging comments on inflation from Federal Reserve Chair Jerome Powell- also aided oil prices. 

US inventories fall sharply as summer demand picks up- API 

Data from the American Petroleum Institute showed that U.S. inventories shrank by nearly 9.2 million barrels in the week to June 28, much more than expectations for a draw of 0.15 mb. 

The reading, which usually heralds a similar reading from official inventory data due later on Wednesday, ramped up optimism over increased U.S. demand, as the travel-heavy summer season picks up. 

The American Automobile Association forecast that this week will have a record amount of road travel, on account of the Independence Day holiday on Thursday. 

Hopes of a substantial pick up in U.S. fuel demand have been among the key drivers of oil’s recent rally, even as the world’s biggest fuel consumer grapples with cooling economic growth amid high interest rates and sticky inflation.

Focus this week is on more comments from the Fed and key labor market readings for more cues on the economy.

Hurricane supply jitters ease, but geopolitical risks persist 

Traders were seen growing less concerned that Hurricane Beryl will cause disruptions in offshore oil production around Mexico and the east coast.

The hurricane, which is currently a dangerous category 4 in the Caribbean, is expected to weaken into a tropical storm by the time it enters the Gulf of Mexico later in the week, according to the U.S. National Hurricane Center. 

Initial forecasts for the hurricane had pegged it as a category 5, which sparked concerns that it would disrupt supplies in the Gulf of Mexico.

Beyond weather conditions, concerns over supply disruptions in the Middle East remained in play. Tensions between Israel and Hezbollah showed little signs of easing, especially as Israel kept up its offensive in Gaza.