Oil strengthens as decline in U.S. crude stockpiles is forecast by Reuters

By Laila Kearney

NEW YORK (Reuters) – Oil prices rose on Wednesday on estimates of falling gasoline stocks and as the market watched for a possible escalation of the war in the Middle East, which could reduce global oil supplies.

futures were up 30 cents at $80.99 a barrel by 0009 GMT. U.S. West Texas Intermediate crude rose 38 cents to $78.73 a barrel.

U.S. crude and gasoline stockpiles were expected to fall last week, while distillate stockpiles rose, according to market sources, citing data from the American Petroleum Institute on Tuesday.

API figures showed crude inventories fell by 5.21 million barrels in the week ended Aug. 9, the sources said, speaking on condition of anonymity. Gasoline stocks fell by 3.69 million barrels and distillate stocks rose by 612,000 barrels.

Falling inventories could indicate higher demand in the US, the world’s biggest oil consumer.

Official government data from the Energy Information Administration will be released later Wednesday.

The market is also awaiting signs of next moves by Iran, which has vowed a tough response to the killing of a Hamas leader late last month, which Tehran blamed on Israel. Israel has neither confirmed nor denied its involvement. The US Navy has deployed warships and a submarine to the Middle East to bolster Israeli defenses.

A widening conflict in the region could hurt crude supplies from Iran and neighboring producing countries, analysts said, tightening stocks and supporting prices.

To keep oil prices from rising, the International Energy Agency (IEA), meanwhile, kept its forecast for global oil demand growth unchanged for 2024 but cut its estimate for 2025, citing the impact of a weakened Chinese economy on consumption.