Oil prices held steady after a big pullback in US crude stocks

Oil prices steadied on Wednesday after trading higher on a bigger-than-expected draw in U.S. crude inventories, while economic headwinds from China and the euro zone capped gains.

Brent crude futures rose 14 cents, or 0.16 percent, to $86.38 a barrel by 1318 GMT, U.S. West Texas Intermediate (WTI) crude futures gained 14 cents, or 0.17 percent, up to $82.95.

Both benchmarks hit their highest level since April in the previous session, but closed in negative territory after the US National Hurricane Center said Hurricane Beryl should weaken to a tropical storm by entering the Gulf of Mexico this week.

The current path appears to avoid key infrastructure in the Gulf of Mexico, Panmure Gordon analyst Ashley Kelty said of supply disruption risks.

U.S. crude inventories fell by 9.163 million barrels in the week ended June 28, according to market sources citing American Petroleum Institute figures on Tuesday. However, gasoline stocks rose by 2.468 million barrels and distillate stocks fell by 740,000 barrels.

“This drop in crude could have only saved more after the hurricane news,” PVM Oil analyst John Evans said in a note.

Analysts in a Reuters poll had expected a 700,000-barrel draw in crude oil stocks, a 1.3-million-barrel drop in gasoline stocks and a 1.2-million-barrel drop in distillate stocks.

The Energy Information Administration is due to release its weekly data at 1430 GMT.

Traders will also focus on US gasoline demand, which is expected to pick up as the summer travel season resumes with the Independence Day holiday this week.

The American Automobile Association estimated that holiday travel will be 5.2% higher than in 2023.

Elsewhere, surveys showed China’s service activity expanded at the slowest pace in eight months and confidence hit a four-year low in June. Global business growth in the eurozone also slowed sharply last month.

OPEC output also rose for a second straight month in June, a Reuters poll found on Tuesday, as higher supply from Nigeria and Iran offset the impact of voluntary supply cuts by other members and the wider OPEC+ alliance.

“OPEC+ was reported to have increased production in June despite pledges to keep quotas under control until the third quarter, and lingering concerns about a tepid recovery in China sent a bearish signal,” said Kelty of Panmure Gordon.